Letter flags 100% income protection premium rise
Financial advisers have been astonished by correspondence received from Zurich-owned life insurer OnePath flagging income protection premium increases of 100% over two years.
Financial Newswire has been provided with a copy of a letter from OnePath to a client in which the insurer points to 50% premium increases split into two yearly increases of 50%.
It states that the premium rates for Income Protection cover with lifetime benefit periods “needs to increase substantially”.
“The change in premium rates will be split into two yearly increases,” it said. “Each increase will be 50% of current premium rates. The first increase will happen on your next policy anniversary and the second on the following anniversary. These increases are in addition to any age and inflation protection increases that may apply.”
The letter said that many factors could have an impact on the premium being paid, including age and policy type along with the number and types of claims made by customer also having that policy types.
“OnePath’s experience over recent years has been similar to Australia’s other life insurer, with more being paid out for income protection claims due to factors such as:
- Increasing length of time on claim
- Increasing cost of mental health claims
- Increasing cost of accident claims.
“Providing you with financial protection when the unexpected happens is our number one priority. We need to adjust premium rates to make sure we can continue to provide the protection you expect if you ever need to claim,” the letter said.
Financial Newswire understands that the letter related to the premium on a continuing Income Protection – Plus (Series2) policy.