Another premium increase lands in your inbox.
And suddenly that income protection policy you’ve had for years looks like an easy target.
“Maybe I’ll cancel it.”
“Maybe I’ll reduce the cover.”
“Surely I can get something cheaper.”
Sometimes you can. But if your policy was taken out before the income protection reforms, there’s a catch:
You might be about to give up benefits you can’t replace.
Older (“legacy”) policies can include definitions and features that simply aren’t available in many new policies today. So, before you make a change based purely on price, it’s worth asking a better question:
What protection would I lose—and could I ever get it back?
The reform dates
Income protection changed in two main waves:
- 31 March 2020: insurers stopped offering new agreed value and endorsed agreed value policies.
- 1 October 2021: further changes applied to newly issued policies, including limits on income replacement and a stronger focus on income earned around the time of claim.
Policies issued before these changes are often called pre-reform or legacy policies. Not every older policy has every “good” feature—but many have at least some.
Why older policies can be worth protecting
Most people compare income protection policies the same way they compare electricity plans: What’s the monthly cost?
But income protection isn’t a utility bill. It’s a contract. And in a claim, the contract wording is what matters.
Here are four areas where older policies can be materially stronger.
1) Agreed value benefits: more certainty when income changes
With an agreed value policy, the monthly benefit is generally based on your income when the policy was set up, rather than relying only on income right before a claim.
That can be especially valuable for medical and dental professionals whose income can move around due to:
- transitioning between hospital employment and private practice
- parental leave, study leave, sabbaticals
- reducing clinical hours
- a temporary dip in practice income
- changing specialties or work arrangements
Newer policies are generally based on income at (or close to) the time of claim. So, if your income has dropped, your benefit may drop too—even if your schedule shows a higher insured amount.
To be clear: agreed value doesn’t mean every claim is automatically paid. You still need to meet the disability definition and other requirements. But it can offer more certainty about how the benefit is calculated.
2) Disability definitions: the fine print that decides the outcome
This is where the real differences often sit.
Some older policies offer multiple ways to qualify as totally disabled—such as being unable to:
- perform one or more important income-producing duties
- work a specified number of hours
- earn more than a certain proportion of your previous income
Some newer policies apply a narrower test (for example, whether you can perform all income-producing duties).
That distinction matters if you’re a surgeon, dentist, veterinarian, anaesthetist—or any professional where one key clinical duty is the job.
If you can’t perform that duty, but you can still do admin, supervise, or consult, a narrower definition can change the claim outcome.
In income protection, the definition—not the dollar amount—often determines whether a benefit is payable.
3) Long-term claims: what happens after six months really matters
Older policies commonly insured up to 75% of income, and sometimes included an additional amount directed to superannuation.
Under reforms applying to new policies from October 2021, benefits are generally limited to:
- 90% of earnings for the first six months, then
- 70% thereafter
That difference becomes more significant the longer a claim runs.
Indexation, super contributions, partial disability benefits, and how income is treated when returning to work can also vary widely between policies.
4) Extra benefits: the “nice to have” features you miss when you need them
Some legacy policies include supplementary benefits that have been removed, restricted or redesigned over time. Depending on the insurer, these can include:
- specified injury benefits
- critical illness benefits
- accident benefits
- rehabilitation or retraining assistance
- accommodation or family support benefits
- more favourable partial disability provisions
- stronger return-to-work or claim indexation features
You don’t buy income protection hoping to use these. But if you ever need them, they can make a meaningful difference.
So why are legacy policies so expensive now?
You’re not imagining it—many older income protection policies have become costly.
Premiums can increase due to:
- age-based pricing
- the premium structure selected
- insurer repricing
- claims experience
- the cost of maintaining more generous policy terms
Industry-wide losses were one of the reasons the reforms were introduced in the first place.
And no—this doesn’t mean every older policy should be kept forever at any cost. If a policy becomes genuinely unaffordable, it may need to be adjusted.
But here’s the key point:
A cheaper policy isn’t automatically better value if it comes with weaker protection.
The “cheap replacement” trap
A replacement policy may look cheaper, but could involve:
- a less favourable income definition
- narrower disability tests
- fewer supplementary benefits
- new medical exclusions
- a shorter benefit period
- reduced benefits during a long-term claim
The right comparison isn’t “old premium vs new premium”.
It’s:
What am I paying—and what protection does it actually provide when it matters?
Why cancelling can be a one-way door
Once a legacy policy is cancelled, the original terms are usually gone permanently.
And replacing cover often means fresh medical and financial underwriting. If anything has changed—health, occupation, income, lifestyle—you could face:
- premium loadings
- exclusions for certain conditions
- a lower insured benefit
- restricted terms
- or even a declined application
Even reducing cover or removing optional features can be difficult to reverse without further underwriting.
One practical rule: don’t cancel an existing policy just because a quote looks cheaper. Any replacement should be accepted first and compared side-by-side with the existing contract.
What a proper review should actually cover
A good review should answer more than “Can I get this cheaper?”
It should look at:
- how the monthly benefit is calculated
- agreed value vs indemnity
- total and partial disability definitions
- waiting period and benefit period
- offsets against other income/insurance payments
- indexation and superannuation benefits
- supplementary benefits you’d lose
- existing exclusions, loadings, special terms
- whether new underwriting is required
- whether cover still matches your income and expenses
- long-term affordability
Often, there are ways to manage premiums without scrapping the policy—like adjusting the insured benefit, extending the waiting period, reviewing optional benefits, or restructuring other parts of the insurance plan while keeping valuable legacy cover.
Bottom line
An older income protection policy can look expensive—until you compare what it would pay, and how you’d qualify, at claim time.
For medical and dental professionals, small differences in policy wording can have a big financial impact.
Before you cancel, replace or reduce an older income protection policy, get advice on what you have, what you’d lose, and whether the change would leave you better protected—or simply paying less.
Thinking about changing your income protection cover?
At Specialist Wealth, we help medical, dental and veterinary professionals understand the fine print in their insurance arrangements.
We can review your current policy, explain any legacy benefits it contains, assess the premium increases, and compare options—before you make an irreversible decision.
Before you cancel the cover, make sure you understand what you can’t buy back.
This article provides general information only and does not take into account your objectives, financial situation or needs. Policy benefits, definitions and exclusions vary. You should review the relevant policy document and obtain personal financial advice before making changes to your insurance.