Shelve Five-Year IP Contracts – Advisers

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%)

Most advisers have given the thumbs-down to maximum five-year terms for IP policies. This is the clear message stemming from our latest poll, following our story last week that APRA was reconsidering whether it will require insurers to implement five-year maximum terms for individual IP policies from 1 October 2022 (see: Five-Year IP Contract Renewal Term Under Review…).

While the product manufacturers have been scrambling behind the scenes in their efforts to come to terms with the implications associated with having to renew individual IP contracts every five years, there has been little public adviser debate on the issue because:

  • The proposed implementation of five-year maximum IP terms was delayed by one year
  • Advisers have been knee-deep in working through the other changes that have been applied to the new era income protection insurance product sets following the 1 October 2021 changes mandated by APRA

Now coming into the spotlight following news that the implementation of maximum five-year IP contracts was in the balance, this poll result speaks volumes for the adviser view on this measure – proposed by APRA as part of its solution to overall sustainability within the income protection insurance ecosystem.

Our poll remains open for a while longer, if you’d like to have your say…


  1. The client’s greatest asset is their FUTURE UNEARNED INCOME, should they suffer a long term disability/sickness/illness, and they cannot work anymore. APRA and the bureaucrats want to deprive them of this long term future income protection by mandating a maximum 5 year benefit period. Does this make any sense to anyone? The advisers have given this a Big Thumbs down big time, as per the poll above, and rightly so.

    • Let’s be clear about what the the 5 year term proposal is.
      The 5 year terms is NOT a maximum 5 year benefit period.
      The 5 years if the length of time that a product can be issued with a certain set of terms and conditions. .
      IE, if a customer takes out a policy with a ‘to age 65’ benefit period and suffers a long term illness that commences when the policy terms are active. The insurer must pay that benefit while the person remains sick, regardless of anything else. All the way to age 65 if necessary.
      If, for example, the insurer decides it wishes to only offer ‘to age 60’ benefits – then once the 5 years of the initial “to age 65” policy are up, that customer will only be able to choose the ‘to age 60’ benefit at that time going forward.

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