Latest Poll – Maximum Five-Year Terms for IP?

In the interests of industry sustainability, APRA should mandate maximum five-year contract terms for individual income protection insurance policies.
  • Disagree (76%)
  • Agree (16%)
  • Need more information (4%)
  • Not sure (4%)

The revelation that APRA is still deciding whether to mandate maximum five-year terms for IP policies forms the basis for our latest poll.

The regulator originally intended the introduction of maximum five-year terms for individual IP contracts to be implemented with the other product changes taking effect from 1 October 2021 (see: APRA Cracks Whip…).

In May last year, however, the regulator announced it was delaying the introduction of five-year terms to allow the industry more time to sort through a plethora of issues associated with this requirement, including how to approach the re-underwriting of existing policy holders (see: …APRA Gives Insurers Another Year). In short, the product manufacturers have been tip-toeing through a minefield of implications associated with the introduction of maximum five-year terms for IP.

On the one hand, says APRA, maximum five-year IP policy terms will contribute to sustainability for insurers and certainty for consumers – although the prospect of benefits to age 65 will become remote to non-existent in the future.

Other measures are already in place as a result of APRA’s IP intervention, each of which are designed to stabilise and perpetuate the income protection insurance market in Australia. Do we need maximum five-year contract terms as well? What might be the unintended consequences if maximum five-year terms are implemented?

Tell us what you think and we’ll report back next week…

Editor’s Note: APRA’s rationale for mandating five-year maximum contract terms for IP policies is encapsulated in this statement it made in May 2021: “Without the policy contract term measure, it is unlikely there will be a change to the current practice that effectively locks in terms and conditions for extended periods of time, leaving premium changes as the primary (or only) lever to deal with the impact of external changes on IDII sustainability.”


  1. What we do NOT need is self absorbed and inexperienced (with risk) government employees dictating how highly experienced product manufacturers should build their products. More enterprise, less government. Government should just get out of the way.

    If a manufacturer wants to build something to maximize client best interest like with a benefit period to age 65 or more then get the bought-and-paid-for bureaucrats OUT of the way so the right thing can be done! We all know far too well that the bureaucrats, like most politicians, are only there to justify their own existence and get their over-rated pay, so, leave them out of the equation wherever possible. THEN we will have REAL progress. The answer is LESS regulation not more!

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