| What can Brian do with his Lump Sum Covers | Approximate premium reduction range | What does making this change mean for Brian? |
|---|---|---|
| Change payment frequency from monthly to annual | Approximately 6% | Paying premiums annually is cheaper than paying monthly. But it also means Brian would have to pay each year's premium upfront, which could affect his cashflow. |
Meet Brian…
| Age Occupation |
45 Accountant |
Meet Priyanka…
| Age Occupation |
40 Teacher |
Meet Brian
Brian is married to Amy. They are busy bringing up their 12 and 10 year old children.
Their combined salaries adequately service the cost of school fees, sporting activities and hobbies, their mortgage and an annual holiday. However, cost of living pressures are creating some financial stress for the couple. Brian is reviewing their budget for places to reduce expenses.
Brian has multiple life insurance policies. They recognise the value of insurance and understands how vital it is for his families financial security and wellbeing. They also know how crucial it is in the current economic environment.
Brian wants to keep his insurance, but is looking for a way to reduce his premium.
- Policy details
- Affordability options
| Gender | Male |
|---|---|
| Smoker Status | Smoker |
| State | ACT |
| Age next birthday | 45 |
| Occupation | Accountant |
| Cover | Non Super |
| Premium frequency | Monthly |
| Premium type | Variable age-stepped |
| Term | $1,250,000 |
|---|---|
| TPD (Non Linked) | $750,000 |
| Trauma (Non Linked) | $250,000 |
| TPD definition | Own |
| Trauma level | Platinum |
| Income Protection (IP) | $8,000 |
| IP Type | Agreed Value |
| IP Benefit perod | To age 65 |
| IP waiting period | 30 days |
| IP level | Plus |
Brian is considering making changes to his policy to make it more affordable, what are his options:
What can Brian do with his Lump Sum Covers
| What can Brian do with his Lump Sum Covers | Approximate premium reduction range | What does making this change mean for Brian? |
|---|---|---|
| Change Trauma cover from Platinum to Extended | 3% | Making this change reduces the number of partial conditions Brian can claim for. Extended and platinum trauma cover the same amount of conditions. The only difference is that platinum pays 25% for partial conditions and extended pays 10%. |
| Reduce Sum Insured | This will vary depending on the size of the reduction | If Brian reduces his sum insured, this will also reduce the value of the benefit Brian or his nominated beneficiaries could receive at claim time. |
| What can Brian do with his Lump Sum Covers | Approximate premium reduction range | What does making this change mean for Brian? |
|---|---|---|
| Change Occupation for TPD cover from Own to Any | 8% | After making a TPD claim, ability to work will be assessed. If Brian changed his cover to the Any Occupation definition of TPD, this assessment will based on his education, training and experience, not just the occupation Brian was in before making the claim. This means it is a broader assessment criteria for Brian to meet and be eligible for a payment. |
| Decline Inflation Protection |
Reductions will vary as cover will still increase with age (stepped cover) |
Declining inflation protection means Brian’s cover won't increase each year at his policy anniversary. Removing it permanently means his cover won't ever increase at policy anniversary. In either case, this could impact the value of the benefit Brian or his beneficiaries are entitled to at claim time. As Brian’s policy is on a stepped premium, it means his premiums will increase with his age still – even though his level of cover won't increase. |
| Linking stand alone insurance cover | Trauma 5% TPD up to 6% |
If Brian has different types of standalone cover (such as Death, Trauma and TPD cover) he can link them together which makes the premium cheaper. This means that claiming against one part of his cover will reduce the value of the other cover by the claim payment amount. |
| Remove the Trauma Reinstatement extra cost option from Trauma cover | 4% | Removing this benefit means Brian’s Trauma cover won't be reinstated for unrelated conditions after we've paid a Trauma claim. |
| Remove the Double TPD or Trauma extra cost option from Trauma cover | Double TPD 10% Double Trauma 11% Combined 21% |
With this benefit in place Brian’s Death cover would be automatically be reinstated after a TPD or Trauma claim was paid, and the premiums on the reinstated Death cover would be waived ($0 premium). Removing this benefit means Brian’s Death cover won't be automatically reinstated after we've paid a TPD or Trauma claim. *This option would only be available if Brian had linked cover. |
| What can Brian do with his Lump Sum Covers | Approximate premium reduction range | What does making this change mean for Brian? |
|---|---|---|
Review Policy Loadings |
This will vary depending on whether there is a loading on the policy and what the loading is |
If we determine that the reason for Brian’s loading no longer applies, removing this loading will reduce the cost of his premiums. This won't impact Brian’s level of cover, but he will need to go through our underwriting process to see if the loading can be removed. |
| Review smoking status | Up To 72% for lump sum | If Brian has stopped smoking for over 12 months he can ask for a review of his smoking status to determine if he is eligible for non-smoking rates of cover. Brian will need to go through our underwriting process to see if the smoking rates can be removed, and if applicable this will reduce the cost of his premiums. |
| What can Brian do with his Lump Sum Covers | Approximate premium reduction range | What does making this change mean for Brian? |
|---|---|---|
Cover Suspension |
No premium payable during cover suspension period |
As he has held the policy for more than 1 year Brian can choose to suspend his cover under this feature (if available) for up to 12 months over the life of the policy. This means that he doesn’t pay any premiums or have any insurance cover during that period of time. Also, if Brian has any health issues during that period, he won't be able to claim for them in the future. |
What can Brian do with his Income Protection Cover
| What can Brian do with his Income Protection Cover | Approximate premium reduction range | What does making this change mean for Brian? |
|---|---|---|
| Change from Agreed Value to Indemnity cover | 15% | If Brian changes his Income Protection to Indemnity cover this means that any claim amount would be assessed based on Brian’s average income immediately prior to the event leading to his claim, rather than the agreed value of his income when he applied for the cover. Brian’s income may have changed since his application for cover and his claimable amount would be limited if more recent income has reduced. |
| Change from Plus cover to Standard cover | 11% | If Brian was to move from plus type cover to standard type cover it would lower the cost of his Insurance and it would mean he still has income protection cover. However it does also mean certain benefits are not included and cannot be claimed on, and there are differences in waiting period requirements and disability definitions to receive a claim amount. |
| Reduce Sum Insured | This will vary depending on the size of the reduction | If Brian reduces his sum insured, this will also reduce the value of the benefit Brian can receive at claim time. |
| Move to an Income Safeguard policy | 29% | If Brian moves to a new Income Safeguard policy he will continue to protect his income against sickness and injury. However, his policy will be an indemnity contract which covers 70% of his income immediately prior to the event leading to his claim. His waiting period and disability requirements will also change. |
| What can Brian do with his Income Protection Cover | Approximate premium reduction range | What does making this change mean for Brian? |
|---|---|---|
| Increase Waiting Period from 30 Days to 60 days | 20% | By increasing his waiting period from 30 days to 60 days, it means that if Brian had a payable claim he would be eligible to claim after 60 days instead of 30 days. |
| Increase Waiting Period from 30 Days to 90 days | 36% | By increasing his waiting period from 30 days to 90 days, it means that if Brian had a payable claim he would be eligible to claim after 90 days instead of 30 days. |
| Reduce Benefit Period from Age 65 to 1 year | 53% |
If Brian was to reduce his benefit period from ‘to Age 65’ down to a 1 year benefit period, it means that the maximum period of time a monthly benefit will be paid to Brian will be 1 year, after the end of the Waiting Period. |
| Reduce Benefit Period from Age 65 to 2 years | 44% | If Brian was to reduce his benefit period from ‘to Age 65’ down to a 2 year benefit period, it means that the maximum period of time a monthly benefit will be paid to Brian will be 2 years, after the end of the Waiting Period. |
| Reduce Benefit Period from Age 65 to 5 years | 29% |
If Brian was to reduce his benefit period from ‘to Age 65’ down to a 5 year benefit period, it means that the maximum period of time a monthly benefit will be paid to Brian will be 5 years, after the end of the Waiting Period. |
| Remove Day 4 Accident extra Cost option | 10% | Removing this option means that Brian can't claim for any injury during his waiting period where he was totally disabled from injury for more than 3 consecutive days. So any claim payments he would receive will be in line with his waiting period. |
| Remove Increasing Claims extra cost option | 10% | By removing the increasing claims option on his cover it means that Brian’s cover will not increase annually with CPI while on claim. |
| Future Insurability Option | 3% for IP Future insurability is built-in for lump sum products. |
By removing Future Insurability Option, he will not be able to increase his cover without full underwriting on the occurrence of specified event, eg marriage, birth of a child etc |
| What can Brian do with his Income Protection Cover | Approximate premium reduction range | What does making this change mean for Brian? |
|---|---|---|
Review Policy Loadings |
This will vary depending on whether there is a loading on the policy and what the loading is |
If we determine that the reason for Brian’s loading no longer applies, removing this loading will reduce the cost of his premiums. This won't impact Brian’s level of cover, but he will need to go through our underwriting process to see if the loading can be removed. |
| Review smoking status | 21% | If Brian has stopped smoking for over 12 months he can ask for a review of his smoking status to determine if he is eligible for non-smoking rates of cover. Brian will need to go through our underwriting process to see if the smoking rates can be removed, and if applicable this will reduce the cost of his premiums. |
| What can Brian do with his Income Protection Cover | Approximate premium reduction range | What does making this change mean for Brian? |
|---|---|---|
Cover Suspension |
100% saving during cover suspension period |
As he has held the policy for more than 1 year Brian can choose to suspend his cover under this feature (if available) for up to 12 months over the life of the policy. This means that he doesn’t pay any premiums or have any insurance cover during that period of time. Also, if Brian has any health issues during that period, he won't be able to claim for them in the future. |
Meet Priyanka
Priyanka and her partner Jana, have just become a family. Jana is taking extended maternity leave to care for their first child.
Priyanka’s modest salary adequately services their mortgage and day to day expenses. However, the cost of living increases are a serious concern for the couple. On a single income they are looking for ways to reduce expenses.
Priyanka has multiple life insurance policies. She recognises the value of insurance and understands how vital it is for her families financial security and wellbeing. They also know how crucial it is in the current economic environment.
Priyanka wants to keep her insurance, but is looking for a way to reduce her premium.
- Policy details
- Affordability options
| Gender | Female |
|---|---|
| Smoker Status | Smoker |
| State | ACT |
| Age next birthday | 40 |
| Occupation | Teacher |
| Cover | Non Super |
| Premium frequency | Monthly |
| Premium type | Variable age-stepped |
| Term | $1,250,000 |
|---|---|
| TPD (Non Linked) | $750,000 |
| Trauma (Non Linked) | $250,000 |
| TPD definition | Own |
| Trauma level | Platinum |
| Income Protection (IP) | $8,000 |
| IP Type | Agreed Value |
| IP Benefit perod | To age 65 |
| IP waiting period | 30 days |
| IP level | Plus |
Priyanka is considering making changes to her policy to make it more affordable, what are her options:
What can Priyanka do with her Lump Sum Covers
| What can Priyanka do with her Lump Sum Covers | Approximate premium reduction range | What does making this change mean for Priyanka? |
|---|---|---|
| Change Trauma cover from Platinum to Extended | 3% | Making this change will reduce the number of conditions Priyanka can claim for. |
| Reduce Sum Insured | This will vary depending on the size of the reduction | If Priyanka reduces her sum insured, this will also reduce the value of the benefit Priyanka or her nominated beneficiaries could receive at claim time. |
| What can Priyanka do with her Lump Sum Covers | Approximate premium reduction range | What does making this change mean for Priyanka? |
|---|---|---|
| Change Occupation for TPD cover from Own to Any | 9% | After making a TPD claim, ability to work will be assessed. If Priyanka changed her cover to the Any Occupation definition of TPD, this assessment will based on her education, training and experience, not just the occupation Priyanka was in before making the claim. This means it is a broader assessment criteria for Priyanka to meet and be eligible for a payment. |
| Decline Inflation Protection |
Reductions will vary as your cover will still increase with age (stepped cover) |
Declining inflation protection means Priyanka ’s cover won't increase each year at her policy anniversary. Removing it permanently means her cover won't ever increase at policy anniversary. In either case, this could impact the value of the benefit Priyanka or her beneficiaries are entitled to at claim time. As Priyanka ’s policy is on a stepped premium, it means her premiums will increase with her age still – even though her level of cover won't increase. |
| Linking stand alone insurance cover | Trauma 13% TPD up to 3% |
If Priyanka has different types of standalone cover (such as Death, Trauma and TPD cover) she can link them together which makes the premium cheaper. This means that claiming against one part of her cover will reduce the value of the other cover by the claim payment amount. |
| Remove the Trauma Reinstatement extra cost option from Trauma cover | 4% | Removing this benefit means Priyanka’s Trauma cover won't be reinstated for unrelated conditions after we've paid a Trauma claim. |
| Remove the Double TPD or Trauma extra cost option from Trauma cover | Double TPD 8% Double Trauma 13% Combined 21% |
With this benefit in place Priyanka’s Death cover would be automatically be reinstated after a TPD or Trauma claim was paid, and the premiums on the reinstated Death cover would be waived ($0 premium). Removing this benefit means her Death cover won't be automatically reinstated after we've paid a TPD or Trauma claim. *This option would only be available if Priyanka had linked cover. |
| What can Priyanka do with her Lump Sum Covers | Approximate premium reduction range | What does making this change mean for Priyanka? |
|---|---|---|
Review Policy Loadings |
This will vary depending on whether there is a loading on the policy and what the loading is |
If we determine that the reason for Priyanka ’s loading no longer applies, removing this loading will reduce the cost of her premiums. This won't impact Priyanka ’s level of cover, but she will need to go through our underwriting process to see if the loading can be removed. |
| Review smoking status | Up To 50% for lump sum | If Priyanka has stopped smoking for over 12 months she can ask for a review of her smoking status to determine if she is eligible for non-smoking rates of cover. Priyanka will need to go through our underwriting process to see if the smoking rates can be removed, and if applicable this will reduce the cost of her premiums. |
| What can Priyanka do with her Lump Sum Covers | Approximate premium reduction range | What does making this change mean for Priyanka? |
|---|---|---|
Cover Suspension |
No premium payable during cover suspension period |
As she has held the policy for more than 1 year Priyanka can choose to suspend her cover under this feature (if available) for up to 12 months over the life of the policy. This means that she doesn’t pay any premiums or have any insurance cover during that period of time. Also, if Priyanka has any health issues during that period, she won't be able to claim for them in the future. |
What can Priyanka do with her Income Protection Cover
| What can Priyanka do with her Income Protection Cover | Approximate premium reduction range | What does making this change mean for Priyanka? |
|---|---|---|
| Change from Agreed Value to Indemnity cover | 15% | If Priyanka changes her Income Protection to Indemnity cover this means that any claim amount would be assessed based on Priyanka ’s average income immediately prior to the event leading to her claim, rather than the agreed value of her income when she applied for the cover. Priyanka ’s income may have changed since her application for cover and her claimable amount would be limited if more recent income has reduced. |
| Change from Plus cover to Standard cover | 11% | If Priyanka was to move from plus type cover to standard type cover it would lower the cost of her Insurance and it would mean she still has income protection cover. However it does also mean certain benefits are not included and cannot be claimed on, and there are differences in waiting period requirements and disability definitions to receive a claim amount. |
| Reduce Sum Insured | This will vary depending on the size of the reduction | If she reduces her sum insured, this will also reduce the value of the benefit Priyanka can receive at claim time. |
| Move to an Income Safeguard policy | 28% | If Priyanka moves to a new Income Safeguard policy she will continue to protect her income against sickness and injury. However, her policy will be an indemnity contract which covers 70% of his income immediately prior to the event leading to her claim. her waiting period and disability requirements will also change. |
| What can Priyanka do with her Income Protection Cover | Approximate premium reduction range | What does making this change mean for Priyanka? |
|---|---|---|
| Increase Waiting Period from 30 Days to 60 days | 20% | By increasing her waiting period from 30 days to 60 days, it means that if Priyanka had a payable claim she would be eligible for payment after 60 days instead of 30 days. |
| Increase Waiting Period from 30 Days to 90 days | 38% | By increasing her waiting period from 30 days to 90 days, it means that if Priyanka had a payable Claim she would be eligible for payment after 90 days instead of 30 days. |
| Reduce Benefit Period from Age 65 to 1 year | 51% |
If Priyanka was to reduce her benefit period from ‘to Age 65’ down to a 1 year benefit period, it means that the maximum period of time a monthly benefit will be paid to her will be 1 year, after the end of the Waiting Period. |
| Reduce Benefit Period from Age 65 to 2 years | 41% | If she was to reduce her benefit period from ‘to Age 65’ down to a 2 year benefit period, it means that the maximum period of time a monthly benefit will be paid to Priyanka will be 2 years, after the end of the Waiting Period. |
| Reduce Benefit Period from Age 65 to 5 years | 27% |
If Priyanka was to reduce her benefit period from ‘to Age 65’ down to a 5 year benefit period, it means that the maximum period of time a monthly benefit will be paid to her will be 5 years, after the end of the Waiting Period. |
| Remove Day 4 Accident extra Cost option | 10% | Removing this option means that Priyanka can't claim for any injury during her waiting period where she was totally disabled from injury for more than 3 consecutive days. So any claim payments she would receive will be in line with her waiting period. |
| Remove Increasing Claims extra cost option | 10% | By removing the increasing claims option on her cover it means that Priyanka ’s claim payments will not increase annually with CPI while on claim. |
| Future Insurability Option | 3% for IP Future insurability is built-in for lump sum products. |
By removing Future Insurability Option, she will not be able to increase her cover without full underwriting on the occurrence of specified event, eg marriage, birth of a child etc |
| What can Priyanka do with her Income Protection Cover | Approximate premium reduction range | What does making this change mean for Priyanka? |
|---|---|---|
Review Policy Loadings |
This will vary depending on whether there is a loading on the policy and what the loading is |
If we determine that the reason for Priyanka’s loading no longer applies, removing this loading will reduce the cost of her premiums. This won't impact Priyanka’s level of cover, but she will need to go through our underwriting process to see if the loading can be removed. |
| Review smoking status | 21% | If Priyanka has stopped smoking for over 12 months she can ask for a review of her smoking status to determine if she is eligible for non-smoking rates of cover. Priyanka will need to go through our underwriting process to see if the smoking rates can be removed, and if applicable this will reduce the cost of her premiums. |
| What can Priyanka do with her Income Protection Cover | Approximate premium reduction range | What does making this change mean for Priyanka? |
|---|---|---|
Cover Suspension |
No premium payable during cover suspension period |
As she has held the policy for more than 1 year Priyanka can choose to suspend her cover under this feature (if available) for up to 12 months over the life of the policy. This means that she doesn’t pay any premiums or have any insurance cover during that period of time. Also, if Priyanka has any health issues during that period, she won't be able to claim for them in the future. |
This information is dated May 2023 and may be subject to change. This case study is for illustrative purposes only and based on the scenario described - actual policy options vary depending on the product type held and premium reductions will vary depending on the specific circumstances of each individual case. Zurich life insurance products are issued by Zurich Australia Limited ABN 92 000 010 195, AFL 232510. The information is a summary only and there are relevant conditions and exclusions that are explained in the Product Disclosure Statement (PDS).
This information is of a general nature and has been prepared without taking account of your objectives, financial situation or needs. Before acting on the information, you should consider whether the information is appropriate, having regard to your objectives, financial situation and needs, and consider the Product Disclosure Statement and Policy Terms (PDS) before deciding whether to acquire, or to continue to hold, the product. Please visit zurich.com.au for a copy of the PDS.
If you’re concerned about your premium, please talk to your financial adviser. They can work with you to see if it makes sense for you to adjust your cover.
Additionally, you can contact us. While we can’t talk to you about your personal circumstances in the same way your adviser can, we can talk to you about your policy, and the options available under your policy.
If you Need help finding an adviser?
Zurich provides a free service that can connect you to an independent financial adviser:
Financial Advice Association Australia (FAAA)
ASIC’s MoneySmart website also has valuable information on what to look for when choosing a financial adviser.
Or contact us
Call 131 551
Monday-Thursday: 8.30am – 7.00pm
Friday: 8.30am – 5.30pm
Email: client.service@zurich.com.au