14 Apr 2021
As you may know, the Sum Insured Limit for Assurance Extra Income Cover Occupation Class 5 is $2,500 per month. Customers have the option of having indexation applied to their policy which means for some customers, their sum insured will exceed $2,500 over time.
We’ve recently conducted a review of the policy wording on our Assurance Extra Income Cover and in doing so identified that the wording could be clearer for Occupation Class 5 customers.
Our current policy wording:
Our policy wording states that if the life assured is Occupation Class 5, we’ll pay the lesser of the monthly sum insured or the limit of $2,500 each month.
How we treat Occupation Class 5 Income Cover claims
If a customer’s sum insured exceeds the $2,500 limit due to indexation we’ll pay the full cover amount at claim time.
We’re working on updating our policy wording to reflect this
We’ll be updating our policy wording later this year to state that if the life assured is Occupation Class 5 and their cover exceeds $2,500 due to indexation, we’ll pay the full cover amount at claim time.
You don’t need to do anything
While we’re working on these changes please just keep in mind when you’re supporting your customers that the current policy wording doesn’t align with our stance.
We’re here to help
If you have any questions, please contact your Business Partnership Manager in the first instance, they’ll be happy to help.
Frequently asked questions
What is indexation?
Indexation is a benefit with a policy that enables the cover level to be adjusted over time to keep up with the rate of inflation. These increases are applied without requiring the customer to provide any information or undergo any underwriting assessment if applicable.
When indexation is applied it changes the policy holder’s cover level and premium. Therefore, it changes how much a policy holder’s insurance pays out at claim time.
The amount the cover level and premium increases will depend on whether there is a fixed increase or it is based on CPI.
What is CPI?
CPI is a tool that Statistics New Zealand (New Zealand’s official data agency) provides to indicate changes in inflation – the rate at which goods and services increase in price over time. You can find out more about CPI on the Statistics New Zealand website www.stats.govt.nz