Income Protection Insurance - worthwhile or not?
- Thread starter Shonnie
- Start date
Sarcasm does not become you.
In our research into this for the VLRC Review, we discovered in the early to mid 90's, there was a massive battle for market share amongst the myriad of Life Coys., competing for business in a small market. Policies were written and costed to write business without a weather eye that people would actually claim.
The inevitable happened, and rationalisation occurred. Dozens of smaller Life Coys., were gobbled up by larger competitors. eg Prudential was bought by Colonial who was bought by Commonwealth Bank which is now Comminsure. When we claimed our SGC TPD, they paid after ONE Claim Form and ONE letter, on exactly the same evidence the other Insurance Company is studiously ignoring....sorry fellas...the Judge will make you focus soon.
There is now a bigger market with fewer players. Income Protection is essential but it also essential that you find a Company who will actually pay when you need it.
With our knowledge acquired now I would say that AMP is OK....Zurich doesn't get to many mentions and of course Insurance offered by Banks are NEVER in SC Lists. Forget the rest.
Most of them have laid off their Risk to big European re-insurers like Hannover, Swiss-Re so if they don't pay up, you are fighting 2 Insurance Company's, not one!!!!
PS
ASIC said this in 2001.
“While term life has been a product in existence for some time, trauma and income protection insurance are products that have become increasingly popular over the last 15 years. However, there are increasing concerns in the industry as to the profitability of income protection products.
In a paper presented at the Investment and Financial Services Association
("IFSA") conference in July 1999, Michael Rice (Rice Kachor Research) stated that income protection was a 'product in crisis'. This has been due in some part to problems with product design, distribution (particularly commission rates) and significant claims. As a result, the premiums for this product have continued to rise through the year 2000. In the past two years, Rice Kachor Research estimates that income protection premiums have risen by between 10 to 15 per cent across the industry.Despite the fact that the product continues to be an important part of the personal risk insurance market, it has continued to make losses. APRA recently announced 'that it will take a closer look at the area of disability insurance after continued concern by the regulator over losses in that area.”
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/nculife.pdf/$file/nculife.pdf
It was after this that McKinsey style Litigation started to proliferate in Australia. Co-incidence? Doubt it.
ASIC said this in 2001.
“While term life has been a product in existence for some time, trauma and income protection insurance are products that have become increasingly popular over the last 15 years. However, there are increasing concerns in the industry as to the profitability of income protection products.
In a paper presented at the Investment and Financial Services Association
("IFSA") conference in July 1999, Michael Rice (Rice Kachor Research) stated that income protection was a 'product in crisis'. This has been due in some part to problems with product design, distribution (particularly commission rates) and significant claims. As a result, the premiums for this product have continued to rise through the year 2000. In the past two years, Rice Kachor Research estimates that income protection premiums have risen by between 10 to 15 per cent across the industry.Despite the fact that the product continues to be an important part of the personal risk insurance market, it has continued to make losses. APRA recently announced 'that it will take a closer look at the area of disability insurance after continued concern by the regulator over losses in that area.”
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/nculife.pdf/$file/nculife.pdf
It was after this that McKinsey style Litigation started to proliferate in Australia. Co-incidence? Doubt it.
I agree with the many replies, definitely get the insurance.
I have Income Protection and Life/TPD through my super fund. The premiums are paid out of the super balance so doesn't cost a cent out of pocket. Trauma cover cannot be done through a super fund, but should only cost around $200pa if you want it.
I would consider using a super fund, and remember that the default cover they offer you can usually be changed (eg. for Income Protection I updated my 90-day wait, 2yr max to 30-day wait and age 65).
I have Income Protection and Life/TPD through my super fund. The premiums are paid out of the super balance so doesn't cost a cent out of pocket. Trauma cover cannot be done through a super fund, but should only cost around $200pa if you want it.
I would consider using a super fund, and remember that the default cover they offer you can usually be changed (eg. for Income Protection I updated my 90-day wait, 2yr max to 30-day wait and age 65).
