Mutual life insurance group PPS Mutual has indexed its policy benefits at three times the level of inflation stating this position was more consistent with the salary growth of the professional services sector that it covers.
The group stated its research found that professional salaries had grown by 3.9% per annum from 2014 to 2016 compared to Consumer Price Index (CPI) increases of 1.3% per annum over the same period.
PPS Mutual Chief Executive, Michael Pillemer said as a result of this finding the 3.9% indexation would be applied to all members over the next year on all of its risk insurance products.
“We offer life insurance products just to professionals. We can therefore index members’ policy benefits to earnings growth solely for the occupations we cover (or inflation if that was to be higher in any year),” Pillemer said.
“This sets us apart from other insurers who generally index their cover benefits to the CPI. We believe our approach better meets the needs of professionals and given that professional earnings have historically increased at a far greater rate than inflation, we are generally indexing Members’ benefits at a higher rate,” said Pillemer.
PPS Mutual offers retail life insurance products to select professionals, including accountants, doctors, dentists, lawyers, and engineers and has developed Income Protection, Life, Total and Permanent Disability, and Trauma insurances tailored to these groups.
You’re heading for a world of pain as inevitably you find you have over-insured policyholders, especially on DI. As they say, money talks, and financial incentives to claim will increase due to over-insurance.
[By the way, a lot of industry have minimums of 3% or 5% kick in, so the difference isn’t so great after all]
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