Managing premium changes

Help is at hand to manage your premium changes

You may have recently received a letter from AIA Australia (AIA) about your life insurance premium increases. 

Your cover gives you peace of mind that you (and your family) are protected should the unthinkable happen. It also includes a comprehensive range of benefits and features.

We also provide rehabilitation services to support you in your recovery journey. You also have access to Medix, a free service to help you understand your condition and develop a treatment plan.

Your policy and access to these additional services are ways to help you live a healthier, longer, better life – throughout your life, not just if you need to make claim.

On this page you will find more information about why premium rates are changing, how to manage your insurance cover, ways to reduce your premium and who to contact should you need more information.

Frequently asked questions

The life insurance industry has seen a continued increase in claims paid for conditions such as cancer, musculoskeletal and mental health conditions. In addition, the low interest rate environment increases the amount insurers need to set aside for future claims. For AIA Australia and other insurers, this has increased the cost of providing insurance.
 
We continue to look for ways to reduce expenses, manage claims more effectively and introduce new benefits to help our customers live healthier, longer, better lives.

To ensure our products remain sustainable and we’re able to support you (and your family) when you need it most, we reluctantly need to raise some of our premium rates.
 
Review of Income Protection Premiums
 
Australian life insurance companies are paying out record numbers of disability claims, including a more than doubling in claim benefits paid for mental illness between 2013 and 2018*.
 
We’ve experienced a continued increase in income protection claims consistent with the wider industry. One of the biggest factors is that income protection claims are continuing longer than expected. This has a material impact on the overall claims cost. Several factors are driving this but particularly a rising proportion of mental health claims, which typically have a longer than average duration.
 
The low interest rate environment also means that lower future investment returns are anticipated on reserves, which are the premiums we put aside to pay for future claims. As a result, higher premiums are required to fund the same expected future claims.
 
*Source: FSC & KPMG 2020
 
Review of Trauma Cover and Total and Permanent Disability Cover Premiums 
 
We’ve experienced a continued increase in claims consistent with the wider industry. Trauma Cover and TPD Cover claims experience have also been deteriorating over recent years across the industry. Cancer remains the top cause of Trauma claims while mental health, accidents and injury are the top causes of TPD claims.
 
These factors lead to a need to increase premiums to ensure sustainability, so we can continue to be there for our customers when they need us. 
 
Review of Level Premiums
 
The low interest rate environment also means that lower future investment returns are anticipated on reserves, which are the premiums we put aside to pay for future claims. As a result, higher premiums are required to fund the same expected future claims.

The premium change shown on your letter is the increase that has been applied as a result of our premium rate review. However, there are a number of other changes that occur on your policy each year that may also increase your premium. For example: 

  • If you have Stepped premiums, your premiums generally increase each year as you get older
  • If you have indexation, your cover amount or monthly benefit increases each year to keep in line with inflation
  • You may have had discounts applied to your policy that have come to an end.

The overall increase in your premium since last year will be a combination of all these factors.

Life insurance is structured as a pool of risk, where a group of people with similar risk characteristics pay premiums into a pool, and when someone makes a claim, it is paid for by the premiums from the entire pool. The risk characteristics that help determine the pool and therefore premium rates include age, gender, smoker status, occupation and premium type.

We will never single out one person and change the premiums of their policy alone. So, when there are more claims than expected in the pool and there is a need to increase premium rates, the cost is shared by all policies in the pool, even those who have not claimed in the past.

The premium rate change will apply from your next policy anniversary date. You can find this date in your letter.

If any of your cover is currently awaiting reinstatement or on a premium waiver, the rate change won’t apply until the policy anniversary after your cover has been reinstated or premium waiver ends. However, the rate change will apply to any cover not currently awaiting reinstatement or on a premium waiver from your next policy anniversary.

 

We highly recommend that you speak to your financial adviser in the first instance. Your financial adviser recommended that you take out insurance on the basis that it provided the best cover for your unique financial situation and personal circumstances.

Your financial adviser will be able to review your current situation, your health status and financial situation, and make some recommendations about how best to manage your premiums, while maintaining cover to suit your needs and protect you (and your family).

It’s important to note that whilst it is an expense to maintain your insurance cover, should you not have cover and the unexpected happens it could be more expensive in the long run. Your adviser can help you understand this more.

If you don’t have an adviser or you would like to speak to us directly about your options, please call our Customer Care Team on 1800 222 622 between 9am-5pm (AEST/AEDT), Monday to Friday, excluding public holidays or via email at au.retention@aia.com.

There are many ways to alter your policy to help manage premium affordability – your adviser can recommend which alterations may be suitable for your needs.

Some examples of alterations your adviser may recommend:
 
  • Opt out of indexation this year, so your cover amount or monthly benefit does not increase this year
  • Change your payment frequency to spread the premium cost throughout the year
  • Reduce your cover amount or monthly benefit
  • If you’ve stopped smoking for more than 12 months, you can apply for non-smoking premium rates
  • If you have any medical or pastime loadings that could be potentially reviewed as your health has improved, or you ceased the pastime
  • Specifically for Income Protection cover:
    • Reduce your Benefit Period
    • Increase your Waiting Period
    • Convert your Income Care Platinum or Income Care Plus to Income Care or Essential Cover (income protection for accidents only)
    • Remove extra options
    • Ask us to waive payment of income protection premiums for up to six months for certain personal circumstances such as involuntary unemployment, parental leave or suffering financial hardship (as defined in the PDS)
    • If you’ve changed your occupation to a lower risk occupation you can apply for a different occupation group which would require fresh health evidence
  • Specifically for Trauma Cover:
    • Convert Trauma Plus Cover to Trauma Cover
  • Remove some options on your policy, while retaining your base cover.

Please speak to your financial adviser to confirm appropriateness of these options for your current circumstances, including your health status and financial situation.

You can reduce your cover at any time, however before you do so we strongly recommend that you speak to your financial adviser in respect of your current financial position and health status to ensure that any reduced level of cover is still suitable for your needs.

If your adviser recommends that you reduce your cover now, you can apply to increase it again in the future. However, you will need to provide satisfactory health, pastime and, where appropriate, financial evidence in order to do so. Depending on the outcome of that assessment, there is a risk that you may be unable to obtain additional cover or may have to pay substantially more if you require additional cover in the future. This is why it is important to carefully consider any reductions in your cover and emphasises the need to discuss this with your financial adviser.

If your health has changed since you started your policy, we recommend you discuss this with your adviser before making any changes to your cover. These health changes could potentially mean that cover is recommended. It might also mean that you may find it difficult to replace your existing cover.

We regularly review our insurance premium rates which can result in premium increases. We do this to ensure our products remain sustainable and we can continue to pay claims. To ensure this remains the case, we will continue to review our premium rates on an annual basis. If we do increase premium rates again in the future, you will be notified in advance of this happening.

No. The change to your premium rates does not impact your policy terms and conditions in any way. You remain protected, provided your premiums are up to date.

Your policy has been tailored to your specific needs by your financial adviser, who recommended this cover as being the most suitable product for you. Choosing to hold your cover with AIA not only means you’re protected by one of Australia’s largest insurers, but you also get to access great services and programs that help you stay healthy and support your recovery if you become sick or injured. For example:

Medix
Medix is a global healthcare management company that provides world-class support to those dealing with medical conditions. Should you ever receive a diagnosis of an eligible medical condition, the road ahead may be long and complex.

Medix will be there to support you, appointing a locally based Medix Dedicated Doctor to review your original diagnosis and treatment, in consultation with leading specialists.

They’ll discuss a personalised treatment plan and engage your treating physicians if you request.
As a customer of AIA, you get free access to their services, even if you haven’t submitted a claim. Find out more by visiting www.aia.com.au/medix.
 
AIA Rehabilitation
AIA Rehabilitation is designed to support people with all types of injury and illness to return to the workforce and everyday life – with the help of highly experienced rehabilitation professionals.

Working collaboratively with you and your supporting medical professionals, our experienced rehabilitation team delivers a wide range of support services all designed to return you back to wellness, back to work and back to life.
 
As a customer of AIA, you get free access to one of the largest and most experienced rehabilitation teams in the life insurance industry.

Before you decide to cancel your cover, you should consider your current health status, age and financial position as you may be unable to obtain the same cover again or may even have to pay substantially more if you require protection in the future. It’s important to note, you will not be eligible for insurance claim payments for any events or conditions that arise after your cover has ended. If you are replacing your cover with alternative cover, you should not cancel it until the replacement cover is in place. We recommend that you consult your financial adviser before cancelling your policy. Your adviser can explain the financial implications of cancelling your policy and how it may impact you and your family’s circumstances.

We highly recommend that you speak to your financial adviser in the first instance. 
If you don’t have an adviser or you would like to speak to us directly about your options, please call our Customer Care Team on 1800 222 622 between 9am-5pm (AEST/AEDT), Monday to Friday, excluding public holidays or via email at au.retention@aia.com.

Your financial adviser’s details should be included on the letter you received recently about your premium rate change. Their contact details also appear on your policy anniversary letter, which you will receive separately.

If you don’t have a Financial Adviser and need help finding one, contact our Customer Care Team on 1800 222 622, between 9am-5pm (AEST/AEDT), Monday to Friday excluding public holidays and we’ll be happy to put you in touch with one.

In 2020 alone, AIA paid $2.2 billion in claims to all our customers# – that averages out to over $42 million per week.

We paid out $695 million in retail insurance claims – that’s on policies just like yours.

Trust is everything when it comes to insurance. So, when you need to make a claim, we're the leaders in looking for ways to support you. And for our 3.8 million customers, that means getting the personalised support they need, when they need it most. Whether it's paying claims, or providing access to programs such as Medix or our rehabilitation programs, we help to make a great difference to the people who put their trust in us and help them enjoy Healthier, Longer, Better Lives.

#includes payments made by AIA Australia Limited and the life insurance business previously known as CMLA.

No longer in contact with your adviser?