Insurers adapting to longer working lives

The risk insurance industry is adapting to people either choosing or having to work past retirement age.

While coverage of a number of risk insurance policies traditionally ceased after age 65, the industry has been evolving its offerings and raising the entry and expiry age limits across products. Much of this change was in response to increasing demand over the last few years, especially since the global financial crisis dented savings.

Suncorp Life executive general manager, life risk, John Crosswell said this was an example of the life insurance industry evolving in response to customer need.

“It is an example of genuine customer-based product design and development,” he said.

ING head of product, marketing and reinsurance Gerard Kerr said the acceptable age range was widening across the industry.

“The entry and expiry ages are extending further into the 60s and 70s, and as people continue to work longer then you will find the continuing evolution of the solutions beyond the current ages today,” he said.

Kerr mentioned ING’s Living Expenses Benefit, which provides coverage up to age 80, as an example of product flexibility. He said while it was designed for non-income producing people, it could be used in conjunction with income protection to form a type of additional disability cover, whether the policyholder was working or not.

Crosswell said Asteron has extended benefit periods on a guaranteed renewal basis to age 70.

“Our top of the line income protection product, Income Advantage, has yearly renewable cover from age 70 to 74. So if someone is at that age, they can decide to extend that cover for an additional year,” Crosswell explained. “People do different things, but the critical thing is that it is not a one-size-fits-all option.”

Tower Australia’s national product manager, retail products, Keith Moynihan, said it was a balancing act between creating something that consumers want and something that is affordable. He said Tower’s Income Protection Optimal offering, for example, was designed for older workers who were concerned about illness as they got older but were not as concerned about injury.

“Through that we are able to reduce the price of the contract,” he said.

Moynihan, Crosswell and Kerr all agreed that advice was especially important in this market segment. Moynihan said this was not only the case because older workers’ circumstances were potentially more complex, but because the actual product offerings were innovative.

“The Australian market is generally quite good in bringing out innovative product solutions, which might be a bit daunting,” he said. “The purpose of that complexity is to make sure that we can provide as comprehensive cover as possible while also trying to keep costs as low as possible.”