Keeping insurance affordable: How Fennell West are helping clients reduce their premiums and get more affordable cover

Let’s face it:  Insurance is always a grudge purchase.  It’s never something we want to buy – there are so many things we’d rather spend our hard-earned money on.

And that grudge, has become even greater over the last couple of years because premiums have been on the up and up.  This has been caused primarily by the insurance ‘hard market’ – which very simply means insurers have had to pay out a lot more than they’re expecting to, and recently are having to charge more in premiums to be able to continue offering insurance.

“The cost of premiums, particularly income protection premiums, have sky-rocketed,” says David Jackson, Practice Manager at Fennell West.  “We’re getting plenty of calls from clients who’ve just had their renewals and they’re wondering what to do as there’s been such an increase.”

Changes to Income Protection Insurance

Over recent years, income protection insurance has become increasingly unsustainable for insurers to offer.  To illustrate the point, over the last five years the industry has paid $4.9bn of claims, resulting in losses of $3.4bn.

So, it’ll be no surprise that there are some pretty major changes coming to income protection insurance that will have an effect on clients.  APRA (Australian Prudential Regulation Authority) has introduced some new measures that will come into force on 1 October.  Essentially, this will result in a number of new products being introduced on the market and other products being ‘grandfathered’.

In order to offer a more sustainable income protection product, insurers will now be offering 60-70 per cent income ratios as opposed to the more traditional 75 per cent.  Some are introducing tiered products, with reduced coverage and in some cases, reduced waiting periods, offered in exchange for more economical premiums.

Should I cut my insurance back altogether?

When premiums increase, it’s natural to reconsider having insurance at all.  Cutting back on insurance altogether, however, is rarely a wise move: after all, it is something that’s essential to help protect the things that are most valuable to us, including our health, our lives and our property.

The team at Fennell West is working closely with clients to review and restructure your insurance to keep costs under control.

“We’ll review things such as waiting & benefit periods, additional features and sums insured to ensure that the product is still right for your circumstances,” says David.

“We’ll also have a conversation with you about how much risk you’re comfortable with, and we can potentially restructure it to make it more affordable and sustainable.”

Protecting your future with insurance

As a one-stop-shop covering financial planning, mortgage broking and insurance, the team at Fennell West can take a holistic view across everything from your super to your home loan – and that’s beneficial because buying a home, and starting a family, are usually key triggers for people to seriously look at how they’re protecting themselves.

While many people have some insurance wrapped in with their superannuation, it’s often not at the levels your life requires now.

You wouldn’t keep paying bills from your bank account if you didn’t know what it was for, and the same principle applies to any insurance coming from your super: you need to ensure it’s fit for purpose, and it’s delivering what you need.

After all, should something happen that prevents you from working, for example, it’s important to have the assurance that you’d be able to keep the money you need today coming in.

“We calculate your needs based on circumstances, including your goals, age, and how much super you have – and advise on the levels of cover you ideally need across life insurance, TPD, trauma and income protection,” explains David.

“From there we can tailor it to your specific needs, and discuss the levels of cover you’re comfortable with.

Having the knowledge that you have those safety nets in place is invaluable – and even though premiums are on the rise it’s essential to have those conversations with us to ensure that your future’s protected.