Insurance cover for self-employed clients has been put in the spotlight by Partners Life as part of a wide-ranging round of pricing increases it has announced.
The increases, intended to address what the insurer refers to as ’emerging claims experience’ across its entire risk product range, will be applied to a selection of both life and health insurance product offers, which include:
- Life Cover and Life Income Cover: up 1.05%
- Trauma Cover: up 12%
- Income Cover, Mortgage Repayment Cover, Household Expenses Cover and Premium Cover: up 12%
- Loss of Revenue and Variable Loss of Revenue Cover: up 12%
- Private Medical Cover (and Specialists and Tests Option): up 12.5%
Disability Income Insurance – Self-Employed
In a message to advisers, the insurer says the self-employed market segment, which includes sole traders, small business owners and contractors, is disproportionately and adversely impacting Partners Life’s disability claims experience.
In order to avoid continuous general price increases into the future, the insurer notes it is prudent to stop compounding the issue by changing the types of new business that its offers the self-employed segment, minimising their to some of what the insurer refers to as the more obvious over-insurance components inherent in current monthly disability products.
…the self-employed market segment …is disproportionately and adversely impacting Partners Life’s disability claims experience
To that end, Partners Life has removed access for self-employed applicants to its Agreed Value Cover benefits for Income Cover (IC), Mortgage Repayment Cover (MRC) and Household Expenses Cover (HEC).
This change will apply from 5 April 2020, after which self-employed clients will only have access to Indemnity Loss of Earnings Income Cover benefit options.
Removing the Agreed Value option for self-employed Partners Life clients comes in the wake of Australia’s corporate regulator, APRA, effectively banning all Agreed Value income protection contracts across the board in Australia from 31 March 2020 (see: Australian Regulator Demands New Course for IP Sustainability).
Other changes changes for all new business quoted and issued for IC, MRC and HEC from 5 April 2020 for self-employed clients include:
- A mandatory Waiting Period of 4 weeks will apply – no other waiting period options will be available
- Pre-disability Income will be re-defined to be based on the most recently completed annual financials immediately prior to the date of disability, rather than being based on the best consecutive 12 months over the previous 3 years
- Mortgage Repayment and Household Expenses Cover sums assured for self-employed clients can only be based on actual mortgage or actual household expenses – that is, the percentage of income basis will no longer be available
- A new Payment Term Restriction Option will replace the previous Mental Health Payment Term Restriction Option which was available under Income Cover (generating a 10%premium discount).
The insurer has confirmed there will be no pricing changes for the following product offers:
- Severe Trauma Cover
- Specific Condition Cover
- TPD Cover
- Terminal Illness Cover
- Accidental Death Benefit
- Ownership Buyout Cover
- Debt Protection Cover
- Key Person Protection Cover
- Hospital Cash Cover
Download the Partners Life Adviser Briefing.