Agreed value income protection (RIP)

Income protection insurance has long been a valuable safety net for Australians, providing financial support in the event of illness or injury. One type of income protection, agreed value, was particularly popular for its guaranteed benefit amount. However, due to industry changes and regulatory interventions, agreed value income protection is no longer available for new policies.

Understanding Agreed Value

With agreed value income protection, policyholders locked in a specific benefit amount when they first purchased the policy. This meant that regardless of any income fluctuations after the initial purchase, the benefit remained fixed. This was particularly attractive to those with variable incomes, such as self-employed individuals or those with commission-based roles.

Regulatory Intervention

In 2020, the Australian Prudential Regulation Authority (APRA) intervened in the life insurance market due to concerns about the sustainability of individual disability income insurance (IDII) policies. APRA identified several issues with agreed value policies, including:

• Moral Hazard: The potential for policyholders to have less motivation to return to work due to the guaranteed benefit.
• Unsustainable Costs: The risk of insurers incurring significant losses if policyholders' incomes declined after purchasing the policy.
• Deviation from the Principle of Indemnity: Agreed value policies could violate the principle of indemnity, where benefits should not exceed economic loss.

APRA's Mandated Changes

To address these concerns, APRA required insurance companies to:

• Cease Offering Agreed Value Policies: New policies must be issued on an indemnity basis.
• Base Cover on Income at Time of Claim: Benefit amounts should be linked to income within the 12 months prior to making a claim.
• Limit Income Replacement Ratios: Benefits should be capped at a certain percentage of earnings.
• Restrict Guaranteed Renewability: Policies should have a shorter guaranteed renewal period.

Impact on Policyholders

The transition from agreed value to indemnity value has significant implications for policyholders. Those with existing agreed value policies have been able to maintain their coverage, but new buyers are limited to indemnity value options.

Key Considerations

When comparing income protection policies, it's essential to evaluate the following factors:

• Benefit Amount: Determine the level of coverage you need to adequately support your lifestyle and financial obligations.
• Waiting Period: Consider the length of time you're willing to wait before benefits begin.
• Benefit Period: Evaluate how long you want the benefits to continue.
• Exclusions and Limitations: Understand any conditions that might affect your eligibility for benefits.
• Premium Costs: Compare premiums from different insurers to find the best value for your needs.

Comparing Income Protection Policies

To find the right income protection policy for you, use our comparison tool to compare quotes from leading insurers. You can also consult with a financial advisor for personalized guidance.

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How we calculate Income Protection Finder Scores

Read full methodology

What different scores mean

9+

Excellent

These products offer great value, with a good score across both features and price.

7+

Great

These are competitive products, though they didn't quite get top scores.

5+

Standard

These products might offer less value or command a higher premium than others in the market.

0+

Basic

These products might only offer a basic set of features or aren't very competitive on price.

1 - 5 of 7

Product AUFLI-INC	Finder Score	Maximum monthly benefit	Maximum % of income covered	Maximum benefit period	Minimum entry age	Sum insured
Promoted TAL Accelerated Protection Income Protection Finder Award	Finder score 9.9 Excellent	$30,000	Up to 70%	Up to Age 65	19	$1,305 million	Get up to 70% of your income covered with flexible short and long term benefit periods.	Get quoteView details Compare	loading Fetching your data...
Promoted AAMI Income Protection	Finder score 8 Great	$10,000	Up to 75%	Up to 5 years	18	$222 million	Take out an AAMI Income Protection policy and get a $100 eGift card after 4 months of cover. Offer ends 03/03/2025. T&Cs apply.	Get quoteView details Compare	loading Fetching your data...
Zurich Ezicover Income Protection	Finder score 6.6 Standard	$12,000	Up to 70%	Up to 5 years	19	$5 million	Get your first month of cover free when you buy Zurich EziCover Income Protection.	Get quoteView details Compare	loading Fetching your data...
ahm Income Protection	Finder score 6.7 Standard	$10,000	Up to 70%	Up to 5 years	18	Data not available	Get 10% off your first year of ahm income protection when you apply by 3 March 2025. T&Cs apply.	Get quoteView details Compare	loading Fetching your data...
Medibank Income Protection	Finder score 6.7 Standard	$12,500	Up to 70%	Up to 5 years	18	Data not available	Save 10% on your first year of Medibank Income Protection when you apply by 3 March 2025. T&Cs apply.	Get quoteView details Compare	loading Fetching your data...

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Finder Score - Income Protection

Income Protection is a little complicated and a lot overwhelming. That's why we made the Finder Score, to make it easier to compare Life Insurance products against each other. Our experts analysed over 12 products and gave each one a score between 1 and 10.

But a higher score doesn't always mean a product is better for you. Your situation is unique, so your policy choice will be too. Don't think of Finder Score as the final word, but as a good place to start your life insurance comparison.

Read full Finder Score methodology

Written by

Tim Bennett

Insurance expert

Tim Bennett is a Finder insurance & utilities expert. For over 10 years he's reported on news, politics, finance and other topics as a journalist and radio presenter. Tim's roles have included radio news reader and breakfast at the ABC, news producer for SBS and producer for Fairfax Media. Tim regularly appears as a health insurance expert on programs like Sunrise and SBS news, as well as in the Australian, The Daily Telegraph, The Courier Mail and more. See full bio

Tim's expertise

Tim has written 122 Finder guides across topics including:

• Personal finance
• Financial comparison
• Health insurance
• General insurance
• Life insurance