Making insurance more affordable

BY   |  FRIDAY, 7 JUN 2024    8:00AM

There are a number of ways you can reduce the hip-pocket impact of personal insurance for clients facing cost-of-living pressures.

Rapidly rising mortgage rates and other cost-of-living increases have impacted household budgets right across Australia. Insurance premiums have also increased significantly in recent years - particularly for income protection (IP) policies in place prior to the APRA interventions* that occurred from 2020.

Many clients are on the lookout for expenses they can cut down or cut out, and personal insurances such as Life, Total and Permanent Disability (TPD), Trauma and Income Protection (IP) are likely to be among them

Cancelling cover can be very risky

Cancelling insurance, or letting cover lapse, can expose a client and their family to significant financial risks in the event of death or disability.

Studies in Australia conducted by the government-funded body HealthDirect show that financial stress can increase the chance of physical and mental health issues, most of which can be covered by insurance.

Also, if a client wants to resume cover:

· underwiring may be required, where they may find that they either do not qualify for certain cover(s) or benefit(s) or there are significant loadings due to a demise in health since the policy was previously underwritten, and,

· certain waiting periods may need to be met again (for example, a claim may not be paid if the insured commits suicide within 13 months of starting a new policy).

Clients should, where possible, be encouraged to retain the cover necessary to help protect their current and future livelihood.