Product scores for income protection products are under review. We need to consider how to take into account temporary measures being applied to contracts with some disablement components - IP, Trauma, and TPD - such as the recent restrictions being applied by Partners Life. In the meantime, you need to familiarise yourself with what those restrictions are and whether they apply to the cases you are submitting. We have a schedule of COVID-19 impacts available for subscribers in the quarterly life and health review, which will be issued today.
Partners Life are remaining open to new business during this uncertain time of COVID-19 but have announced a number of restrictions to IP, MP, and TPD, while placing a minimum 6 month stand-down for eligibility for Premium Holiday and Policy Suspension claims. Stating ‘As soon as we are able to remove these restrictions for new business, we will contact those advisers and clients affected directly to review and/or remove these restrictions for any policies issued during this interim period.’
Here is more information:
- No new Loss of Revenue Cover or Variable Loss of Revenue Cover benefits will be issued. The cover will be deferred.
- No new Agreed Value benefits based on Income will be issued. This includes Income Covers, Mortgage Repayment and Household Expenses benefit which are to be based on income. Indemnity Loss of Earnings Income Cover will be offered as an alternative by way of Offer of Terms.
- MRC and HEC based on actual mortgage repayments and expenses will still be allowed.
- Disability benefits of any kind will have a Mental health exclusion applied by way of Offer of Terms. This includes lump sum benefits which cover disability such as TPD, Trauma Cover and Hybrid Business Benefits.
- Disability benefits of any kind will have a restriction for disability first arising while a life assured is unemployed or is on a period of leave without pay. This includes lump sum benefits which cover disability such as TPD, Trauma Cover and Hybrid Business Benefits.
These lives assured will instead be considered an Occupation Class 5 immediately they stop work rather than after the usual 12 month period. This restriction will be achieved by way of an Offer of Terms.
- All new policies to be issued will include a minimum 6 month stand-down for eligibility for Premium Holiday and Policy Suspension claims. This restriction which will be achieved by way of Offer of Terms.
Asteron Life has recently made a number of changes to IP options based on SME research and also adviser feedback. See more details from them below:
Ability to Mix and Match different Income Protection options
One enhancement we made was the ability to offer new clients a range of flexible cover options which combine MLC and IP to tailor cover which suits your client. All new business has the option to combine Loss of Earnings (LOE) or Loss of Earnings Plus with Mortgage and Living Cover.
New Ten-hour benefit
We have also introduced an optional Ten-hour benefit which allows customers to work for up to 10 hours without it affecting their Living support benefit payment under Mortgage and Living Cover. This benefit provides a great option for customers who are self-employed and may work hours which don’t generate an income.
Given recent market announcements relating to income protection we would like to get your take on the current environment. Click here to have your say.
Back pain is the leading cause of disability in most countries. Doctors often prescribe addictive pain relief as it is the simpler to prescribe medications and order tests than telling patients it is unlikely to resolve their back pain. Doctors willingness to prescribe pain relief is why back pain is a major reason for people getting addicted to opioids.
Americans spend $88b USD annually to treat back and neck pain, while the best treatment for most back pain is non-medical. Cigna found that 87% of clients who had surgery were still in so much pain two years post-surgery that they need additional treatment. Click here to read more. Many of these medical interventions have a dubious track record for success.
We might speculate that in combination, non-specific pain, medical willingness to try something - anything - and long-term income protection could be either immensely valuable, or dangerous to long-term health, or perhaps, at different stages, both.
The Financial Services Council has launched new insurance research highlighting the gap between typical and ideal cover levels and some significant challenges facing the industry in lifting consumer engagement.
In the media release the CEO of the FSC, Richard Klipin, highlighted the purpose and key findings:
The study looked at the three main types of life insurance available in New Zealand; life insurance, income protection/mortgage repayment insurance and critical illness insurance. “While 54% of those surveyed agree that it is important to have the right amount of insurance to cover risks including illness, death and job loss; estimates of underinsurance are much higher,” continued Klipin. Critical illness showed the highest level of underinsurance with only an estimated 9% of Kiwi’s being sufficiently insured, followed by 11% who had adequate income protection/mortgage repayment insurance and 29% with adequate life insurance.
Consumer views are included in this introductory video:
The research can be viewed here.
Asteron Life have announced a number of changes to their Mortgage and Living Cover, as well as the ability to quote it alongside Income Protection.
As of Monday 9 December Asteron announced they have introduced:
- The ability to combine Mortgage and Living Cover (MLC) with Income Protection (IP)
- An optional Ten-hour benefit on Mortgage and Living Cover
- Enabling bundling discounts across Personal and Business
- Adding level Life Cover projections to age 100
Here is an example of combining Mortgage and Living Cover with IP: Combining MLC and IP may be suitable for clients who want the advantage of not offsetting ACC benefits as well as some tax deductibility of premiums; or for self-employed clients who could manage basic oversight of their business in less than 10 hours a week; or for self-employed clients who are used to meeting regular tax obligations.
Here you can download a case study helping explain the optional ten-hour benefit on Mortgage and Living Cover. Download MLC Case study
Collectively life insurance companies have lost close to $3.4 billion over the past five years as a result of the sale of disability income insurance to individuals. The Australian Prudential Regulation Authority is responding to ongoing losses of insurance companies by introducing capital charges, this will require life insurers to look into product design and pricing flaws. It will also require us to do the same, for although our IP experience is nothing like as bad as Australia's, that's no cause for complacency. People and policies are similar - and therefore have similar motivations and incentives.I would hate to see how our in-force IP book responds to an economic downturn.
Andres Webersinke is Head of Life/Health Region Australia/New Zealand for General Reinsurance Life Australia Limited. Andres identifies the issues facing disability income insurance, which are many. Briefly, they are:
- Over-insurance - on an individual case basis. Usually the replacement ratio is too high, caused by a failure to offset some income during the claim.
- Benefits paid without tax deducted - and claimants may not pay tax for a variety of reasons
- Employers failing to support a person through either work changes or rehabilitation opportunities
- Rating / research houses encouraging broader or more generous policy definitions
- Reinsurance and cross-subsidisation
- Product design
- Claims philosophy
Andres also makes suggestions to tackle some of these issues. With a little creativity there are more opportunities beyond these too. Drilling down into individual segments that have particularly poor outcomes would yield more opportunities to tackle some of the knottiest issues. Examining product combinations - particularly those with mortgage protection, but not only them - could also help a lot. Two concepts of the insurtech world could also unlock solutions for a large part of the market parametric cover and claims automation. You can obtain your copy of the report by contacting Gen Re.
An absolutely huge couple of weeks of changes:
- Updated OnePath Mortgage Protection Prices effective 1 July
- Updated nib health prices effective 1 July
- Updated Southern Cross health prices effective 1 July
- Updated Asteron Life and Trauma rates effective 1 July
- Needs Analysis – added Standalone and Accelerated options for existing Trauma and TPD insurance
- Research report – added a new page at the end explaining the QPR Research methodology
Completed a big set of changes, with some quite substantial shifts (see more posts later today and next week)
- OnePath - Income Protection, Mortgage Protection and Trauma - changes in entry ages
- OnePath - Income Protection - age limit changed