Insurance commentator Russell Hutchinson previously pointed out the “problem of the newly-promoted client”.

He said in one case a client suffered because their insurer used “the best continuous period of 12 months [income] in the last three years” to judge the level of benefit that would be paid out by their income protection policy.

But they had only been promoted three months before, so the time spent on a new, higher salary was dragged down by the lower previous income.

“I think that there is an issue with product design,” Hutchinson said, “Having underwritten the client on the basis of the $120,000 plus car then I think the insurer should have a provision to ensure that is what they pay to a claimant rapidly disabled.

“I don’t think the intention of the financial underwriting provision is to penalise someone like this – it is to ensure a genuine principle of indemnity is applied if the insured’s income has reduced permanently. The wording could be changed to recognise this.”

AIA has now changed its pre-disability definition so that customers can be assessed on the monthly income they earned immediately prior to their disability.

Asteron also allows customers to be assessed on monthly income if there has been an increase, provided they are an arm’s length employee – not a sole trader or employee or partner in their own business.

Hutchinson said that solved the problem for clients with those insurers.