What’s ahead for the evolution of life insurance products


Gavin Teichner

To ensure the life insurance sector is sustainable for all Australians, it is essential that we bring progressive thinking and have a long-term sustainable vision for the future.

Across the industry over recent years, we have seen an increase in the cost of claims and, consequently, price increases which have had lasting impacts for both advisers and customers. To ensure long-term sustainability it is critical that the industry gets the product design right so that the benefits paid align to the product’s purpose. This will help both customers and financial advisers – customers, with product affordability, and advisers in supporting clients to choose a product that best suits their needs.

Individual Disability Income Insurance (IDII) products meet a critical consumer need and, as an industry, we have a responsibility to meet that need now, and into the future. Updates to the design of IDII will bring fundamental change, challenge, and a period of adjustment for the market, however they will also bring great opportunity for insurers to reframe the value that these products provide to consumers; supporting them during what are often their most difficult times.

The upside of new and more sustainable IDII products is that they will deliver much more certainly to customers and advisers about future pricing, while also providing benefit designs that have greater clarity on exactly what the benefits are. A more affordable product and greater certainty on the product benefits has the potential to increase the size of the market, enabling advisers to protect more Australians when they need it the most.

Building confidence around the product changes

Historically, we have not seen dramatic change in product design and products have been reasonably similar. Advisers have become accustomed to the existing product suite, knowing exactly what product suits each of their clients. In many instances, this means advisers feel a level of unease that the dramatic de-commoditisation of products may not meet their clients’ needs in the future.

There is an essential role for life insurers to work with financial advisers through this change, to communicate the benefits of how the changes will offer existing customers more choice to manage product affordability, as well as provide potential new clients with clear, easy to understand options. There is also an important opportunity for the claims payment process to be simplified and sped up through the design of simpler and more affordable products and processes.

Life insurers can help advisers through these changes with clear communications and client resources; highlighting the aims of the product, what they provide, and most importantly, how the benefit designs will help customers understand and value their cover. This will drive greater confidence in the life insurance industry as a whole.

Challenging established practice and embracing the opportunities

It’s important work, and the IDII changes go beyond just increasing the simplicity of product, process, and options. The true greater value lies in the ability of advisers to effectively communicate to clients that the products will be more affordable and more responsive to the rapidly changing society we are living in today.

More specifically, employment has undergone significant changes and we must adapt to that. Many people are changing jobs more frequently, there is greater flexibility to work part time and from anywhere, and a number of traditional jobs are ceasing to exist, so we must ensure our products sustainably service these lifestyle changes.

There is a need here for us to relook at a lot of our core assumptions about things which have informed previous product design, and to test what’s become established practice. Better disability products will ensure that customers who have changed their employment or lifestyle no longer pay for cover they do not need, whilst being responsive to changing employment conditions.

Looking towards the post-implementation of IDII changes

At TAL, we have put great effort into conducting market research into customer needs and expectations. This has enabled us to uncover insights and better understand where existing products need to be evolved to meet the changing needs of customers in terms of relevance, sustainability and value.

We are committed to bettering the industry and ensuring that our existing products continue to evolve alongside the new ones. We want our customers to be confident in the cover they have, the options available to them, and that they are protected should the unexpected occur. TAL has endeavoured to play a leading role within the industry during a changing time, contributing to the confidence Australians have in us as life insurers and the protection we provide.

Through that, we have the opportunity to educate advisers that in the long term, there will be incredible benefits from offering new products that align to their promise of stability, which in turn will help support the different economic and changing socioeconomic circumstances of their client base.

By Gavin Teichner, Executive General Manager – Individual Life

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