Recent data shows that underinsurance in Australia is still a problem, with Rice Warner stating that the gap has increased[1].  There could be various reasons as to why this gap has increased from the reduction in financial advisers in the Retail insurance market, with industry changes likely playing a big role. There’s also the recent pandemic and now increases to the cost of living which have impacted Australian’s and their spending power. In addition, there are the objections to considering life insurance.
 

Below are six objections your new and existing clients may have to considering their insurance needs, and some considerations for them to think about.

We understand that pricing is an important factor for clients, and we’re continuing to provide options for clients to keep the cost of insurance down, while also providing them with more benefits even before they may have to claim.

A big consideration is policy structuring. This can include choosing a 5- or 2-year benefit period as opposed to ‘age 65’. Not only could your clients save 20-45% on their premiums on a shorter benefit period, if they take out a new Income Protection CORE policy with either a 5- or 2-year benefit period, we will guarantee that their rates are locked in for five years.
 

Other options could include considering our Crisis Extension product along with Crisis Recovery which could help save your clients up to 35% on their premiums.

If you want to read more about the 5-year rate guarantee or download either the Priority Protection or Tailored Protection (ex-CommInsure) affordability flyers, click the links below.

While keeping active and staying healthy is important, our AIA Vitality program incentivises members to make healthier choices and receive rewards for reaching goals and get discounts on their insurance policy.
 

And now with our Healthier Life Reward benefit, new clients get even greater incentives on their AIA Priority Protection policy. You can read more below.

With an AIA Priority Protection policy, your clients get the added benefit of having the option to tap into our AIA Embrace ecosystem which includes various rehabilitation support programs, including mental health support, CancerAid and many more. 

While superannuation and insurance inside superannuation plays an important part, especially in keeping the underinsurance gap lower than it would otherwise be, there are limitations and things that clients should consider when relying on insurance inside superannuation. These include:
 

While your clients may not have any dependants now or much in terms of debt, that’s not to say their circumstance won’t change in the future. Your client may find themselves starting a family sooner than expected, gaining promotions in their jobs leading to more disposable income and bigger debts.
 

Your clients may believe that they will receive help from the government in the event they are sick or injured for extended periods of time. While the government does provide some financial assistance, is the amount provided sufficient to support their needs? For example, the maximum basic Disability Support Pension (DSP) rate for someone who is over 21, single and without dependants is $971.50 per fortnight [2].

The best thing about being young and healthy when applying for insurance cover is that premium rates are generally lower, with potentially fewer underwriting requirements. Also, the likelihood of having exclusions or premium loadings applied or being declined is much lower than that of someone older, since younger people tend to have less health issues. As your clients age their health is more likely to decline, which would increase the risk of having exclusions or premium loadings applied if they apply for insurance later in life.

Workers compensation is a form of insurance payments to employees, which covers their wages and medical expenses, however this is only available if your client has become sick or injured due to their work. Furthermore, the rules around workers compensation differ from each state.
 

For example, in the first 26 weeks for New South Wales residents, your clients weekly wage rate is calculated at:
 

After 26 weeks of incapacity, weekly payments will be paid at:
 

The statutory rate is indexed twice each year in April and October. The statutory rate for a single worker from 1 April 2023 to 30 September 2023 is $563.40 [3].

Private health insurance is a worthwhile consideration as it provides your clients with more choices when it comes to medical options, such as being able to choose your doctor. Private health insurance can cover a lot of costs associated with choosing a private health option, however there is a still an out-of-pocket cost that your clients may be required to pay.
 

Having an insurance policy in tandem with a private health insurance policy can give your clients more choice as they’re able to fund specialists that they may not have been able to otherwise with any claims paid from their risk insurance policy.

With the above in mind, AIAA Priority Protection policies can help in your clients’ time of need. AIAA provides great product offerings, from Priority Protection (life, crisis, Total and Permanent Disablement and income protection cover), AIA Health insurance and our science backed health and wellness offering, AIA Vitality. Bundling these together, allows your clients to meet a wide range of their insurance needs, while also obtaining greater discounts across their products. And with AIA Vitality, clients gain rewards for reaching key health and fitness targets.