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.
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.
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.
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