There is a future for level premiums: panel

The changes through individual disability income insurance (IDII) will not be the death knell of level premiums, a panel has agreed.

Speaking at the Association of Financial Advisers (AFA) Vision Conference, TAL chief executive, Brett Clark said it would be strange if there was not a future for level premiums.

“If you look at every global life insurance market, level premiums are a very significant and strong part of the market. Australia is unique in its uptake and in some ways has a reliance on step premiums. I would hope there was a future in level premiums, that’s our intent, but there are complications around level premiums,” he said.

“While interest rates don’t make it easy and we’ve seen some pricing pressure on level premiums as a result of that and how it works, within this five-year piece with the income protection that needs to be worked through as well. So certainly not straightforward but it would be strange to me if it wasn’t part of the future.

“Level premiums give a certain expectation that we haven’t been able to fulfil so we have to deal with that in terms of the way we describe it and explain it.”

Also on the panel, AIA chief executive, Damien Mu agreed that there was a future for level premiums and that what had worked well were fixed term level products as it gave clients more certainty.

“Fixed terms can give more certainty where we are not over pricing products because of a degree of uncertainty, and we can factor that life might change, but have certainty whether it is five, 10, 15, 20 years that matches a client’s needs,” he said.

“That can be done and should be done. When we step back, it’s thinking about how it works in the whole ecosystem, against best interest duty, pricing, affordability etc. It has to be part of the future but we haven’t had a proper level premium for a fixed term product in the Australian market.”

MLC chief of life insurance, Sean McCormack, also agreed and said what had not changed was that Australians still had insurance needs for the long-term and the whole basis of level premiums was putting protection in place for the long-term.

“We’ll see more and more level premium contacts for fixed terms and that will become more of the norm. I don’t agree that the changes though IDII represent the death knell of level premium,” McCormack said.

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The comments by these various chief executives is a crock.
Clients who have been seduced into believing that paying 80.0% up front for level premiums V's stepped premiums would provide long term certainty have seen these life companies increase existing level premiums by up to 25.0%.
Then offer the client an inferior product to replace existing DI covers with less benefits and poorer benefit paying periods, so the life companies who were for many years willing to market better DI products in the past can now dismiss a potential contingent future liability, perhaps, in the event of a claim.
Does anyone accept or trust the lack of morality shown by the current mob of life insurers.

You have orchestrated your own demise via the instillation of the LIF legislation.
By reducing adviser remuneration (commission) , increasing "clawback "periods, no adviser can provide risk advice and be paid accordingly and remain profitable.

So a panel of CEOs of life insurers - of the same executive class so frightened of the 'first mover' boogeyman that they've instead chosen to run their businesses into the ground while seeking governmental protection - think there's a place for level premiums?

The CEOs of the same companies jacking up level rates on their back book, while offering discounts on new business?

Frankly, given the woeful (and still deteriorating!) performance of these businesses by practically every measure, I couldn't care less what they thought about anything other than getting their acts together.

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