Pay rise does not have to mean nasty shock

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.