- March 5, 2020
- Posted by: Alana Hodgins
- Category: News
Due to regulatory changes, Agreed Value Income Protection policies will soon become a thing of the past. As of April, Agreed value income protection will not be available in the Australian market; rather only Indemnity contracts will be offered. Agreed value policies that are currently in place will not be changed as they are guaranteed renewable – this change will only affect the issue of new agreed value contracts and the opportunity to modify a contract to be agreed value.
What’s the difference?
An Agreed Contract differs from an Indemnity Contract in that your income is agreed upfront, like agreed value for your car insurance. This can be an advantage if your income subsequently reduces as you will still be paid at the level that was proven at the time of the application. An Indemnity Contract requires proof of income at time of claim, like market value car insurance, and so can result in you not being eligible for the full benefit amount you have been paying for as your income may not support it. An Indemnity Contract is generally cheaper and with regular reviews the benefit amount will be remain relevant to your current circumstances.
What does this mean to me?
- If you have a current Agreed Contract policy you will not be able to apply for the same product in the future. It will be important for you to keep this in mind when considering any potential changes to your cover
- If you do not have a Agreed Contract, but would like know how to change your policy, please contact our office as soon as possible and we will step you through your options
If you have any questions regarding the differences between these different contract types or would like to consider a review of your cover please contact us.