OnePath Life is making pricing changes to its OneCare Income Protection insurance product range, citing the fact that life insurance in Australia, for IP products in particular, has become unsustainable.
Taking effect from 15 July 2020, key changes – for new business only – include:
- Premium increases of 20 percent to OneCare Income Secure Cover (excluding Essentials) and Business Expense Cover
- Removal of Level Premiums for Income Secure Cover, Business Expense Cover and Living Expense Cover
- Removal of the Unemployment Benefit under Income Secure Cover
While these changes will apply for new business from 15 July, OnePath Life says premium changes for existing contracts will be rolled out from September 2020 onward, as from the client’s next policy renewal date.
In a message to advisers in one of its regular updates, the insurer notes this delay in premium increases for existing policy holders has been influenced by what it refers to as the severity of the Covid-19 pandemic on its customers and the significant economic and associated pressures on affordability.
…the changes are designed “…to ensure that OnePath can continue to pay insurance benefits in a viable and sustainable way…”
Addressing the sustainability issue, the insurer notes these IP pricing adjustments reflect the sustained, upward trend of claims being experienced in the Australian market and that the changes are designed “…to ensure that OnePath can continue to pay insurance benefits in a viable and sustainable way…”
At the same time as detailing these pricing increases, however, OnePath Life has also emphasised a range of available affordability options “…so customers can stay covered with the right amount of cover for their circumstances.” These affordability options include:
- Alternative product options (OneCare Income Secure Essentials)
- Flexible cover options
- Some temporary-hold or reduction offers introduced in response to the economic environment
Commenting on these changes, Zurich/OnePath’s Chief Distribution Officer, Life & Investments, Kristine Brooks, noted that the changes are a measured and prudent response to recent market dynamics and claims experiences. She says they are designed “…to ensure sustainability of coverage for Australians at a time when it has never been more important that their lives remain insured and income protected.”
Brooks added that, given the current economic uncertainty, “…we have taken steps to build in affordability options for customers, so they may continue to retain their cover – no matter what their financial circumstances.”
This move from OnePath follows the recent announcement by MLC Life Insurance that it was also in the process of making premium changes to its risk products range – which also apply for new business from 15 July (see: MLC Life Insurance Premium Adjustments).
Advisers can click here to access a release from OnePath which provides additional information around these and other changes that will take effect for new business from 15 July 2020.