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.

Compare direct brands for income protection

How we calculate Income Protection Finder Scores

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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.

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Updated regularly

Product	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	Save up to 10% on premiums every year for the life of the policy on AAMI Income Protection. Offer ends 31 July 2025. T&Cs apply.	Get quoteView details Compare	loading Fetching your data...
Suncorp Income Protection	Finder score 7.9 Great	$10,000	Up to 75%	Up to 5 years	18	$222 million	Save up to 10% on premiums every year for the life of the policy on Suncorp Income Protection. Offer ends 31 July 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	No medicals or blood tests needed to apply. Plus, if you're a Medibank health member, get a 10% discount on your premiums every year.	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	ahm offers a simple application process. Be approved online or over the phone. No medical or blood tests needed to 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...
Real Income Protection	Finder score	$15,000	Up to 70%	Up to 5 Years	18	Data not available	Cover up to 70% of your monthly income if you can’t work due to illness or injury, up to a maximum of $15,000 a month.	Get quoteView details Compare	loading Fetching your data...

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How we picked these

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

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Written by

Tim Bennett

Insurance expert

A seasoned journalist with over 10 years of experience in news, politics and finance reporting, Tim has previously held roles at the ABC, SBS and Fairfax Media. Tim’s expert insights have been quoted in The Australian, The Daily Telegraph, The Courier Mail and more. He regularly appears on TV and radio, and has been interviewed on 7 News, Sunrise, SBS News, ABC Local, 3AW and 5AA. Tim is passionate about simplifying complex insurance topics for Australian consumers. He holds a Bachelor of Arts (Politics) from Macquarie University and a Tier 1 General Insurance (General Advice) certification, which meets the requirements of ASIC Regulatory Guide 146 (RG146). If you’re interested in a media interview with Tim, please reach out to our PR team at aupr@finder.com. See full bio

Tim's expertise

Tim has written 149 Finder guides across topics including:

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