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.
Like a snake eating it’s own tail. With new business drying up, this is the only way they can increase profits. The death spiral continues…
LIF promoting Pollies, Bureaucrats and Life Ins Co.s promised reduced premiums.
In LIF first 4 years premiums up 100% +.
Now in 6 years since LIF premiums will be up 200% plus.
World record disaster policy hey Canberra.
This company like most others that used to be in the risk business were happy to offer contracts that offered lifetime benefits.
They no longer want to be in the risk business and like others who have substantially increased old contracts with the intent of pricing the clients off their books, this company is no different.
Why would anyone want to trust a life company who is happy to accept premiums, except when it comes to a claim.
Life companies for many years have lacked a degree of morality and the pretext for getting rid of legacy products is just another example of how far the life insurance has descended.
Thanks god LIF was introduced to reduce premiums….oh wait
As a big “supporter” of OnePath and having around 160 life insurance clients with income protection, Trauma and Life insurance, I fail to see where these claims experiences are coming from. My client base is made up of clients between 45 and 60 primarily – NOT ONE CLIENT on an income protection claim…last one was two years ago…
But Stephen Jones wants to maintain the risk industry as is, and retain commissions at current levels rather than attempt to increase the pool of insured lives and actually manage these cost pressures.
The majority of other insurers with lifetime benefit periods have done the same over the past few years. I think 85% in one year was my highest via Resolution Life / AMP Life.