APRA announces changes to Income Protection Insurance - effective from 31 March 2020
Australian Prudential Regulation Authority (APRA) has announced a series of measures, including capital charges requiring life insurers and friendly societies to address flaws in product design and pricing that are contributing to unsustainable practices in the sale of individual disability income insurance (DII), often referred to as income protection insurance.
As a result, APRA has advised that they expect to see the following changes made by income protection insurance providers;
Ensuring benefits do not exceed the policyholder’s income at the time of claim (i.e., indemnity contract)
Ceasing the sale of agreed value policies
Avoiding offering income protection policies with fixed terms and conditions of more than five years
What happens to existing policies?
Existing retail income protection policies which include a ‘Guarantee of Renewability’ in their policy wording will continue.
How can we help?
If you have any questions or would like to discuss your options, please contact AMA Financial Services on 1800 262 346 or email firstname.lastname@example.org.
For further information, please visit the AMA Financial Service website.