Navigating the Future of Life Insurance: Trends to Watch in 2025

After over 30 years in the financial services industry, I’ve come to appreciate the remarkable resilience and adaptability of our profession. This space is ever-changing, driven by the complexities of protecting Australians’ futures, and 2025 will be no exception. The trends emerging now are poised to reshape the way policies are structured, sold, and serviced—and, ultimately, how we deliver peace of mind to our clients.

This is my take on the key changes ahead, along with insights for advisers committed to navigating these shifts with purpose and care.

Sustainability of TPD Policy Definitions

Total and Permanent Disability (TPD) insurance is evolving, with definitions being refined to address rising claims, especially those linked to mental health. These changes aim to ensure the long-term viability of TPD policy covers while maintaining appropriate support for claimants. Insight for Advisers: Conversations around mental health are deeply personal and often sensitive. Take the time to educate clients on these changes and explore ways to build comprehensive coverage tailored to their unique circumstances.

Premium Adjustments for Legacy Income Protection Policies

Premiums for older agreed and indemnity value income protection policies are expected to continue increasing due primarily to the ease and rate of claims. These more consumer favourable policies present higher risks to insurers including increasing duration and cost of claims, prompting adjustments to maintain balance across the risk pool of the insurers. Insight for Advisers: This is an opportunity to reconnect with clients. By reviewing their existing policies with today’s new policies, you can provide clarity on their options and guide them with recommendations towards sustainable solutions that align with their needs.

Streamlined Medical Requirements

To enhance accessibility, insurers are reducing medical test requirements for higher sums insured. This shift benefits clients by simplifying applications and cutting down wait times. Insight for Advisers: Underinsurance remains a challenge in Australia. Use this shift as a reason to reach out to clients who may now find it easier to either obtain or increase their coverage and secure their future.

Expansion of Industry Super Fund Covers

Industry super funds are continuing to change their default life insurance coverage offered to members. While this adds a base layer of protection, it’s normally generic and may not align with individual needs, objectives, income, occupation type and risks and other financial risks. Insight for Advisers: Educate clients on the value and limitations of default covers. In nearly all cases this default cover won’t be enough for clients and life insurance is deeply personal.? You can help them create policies that reflect their goals and priorities, tailored insurance cover needs and not just the baseline.

Embracing Portal Technology Between Advisers and Insurers

Advisers and clients are benefiting from portal technology that streamlines quoting, underwriting and application processes. These platforms are reducing administrative burdens, increasing accuracy, and delivering a better user experience including AI advancements. Insight for Advisers: Familiarise yourself with the latest portal technologies offered by insurers to integrate them into your practice and continue to enhance your service to clients.

AI in Claims Processing

Artificial intelligence is transforming claims processes, offering faster and more consistent outcomes. By automating certain criteria and reading long medical reports, AI frees up the insurers resources to focus on complex claims requiring human judgment and personal service. Insight for Advisers: Be the bridge between your clients and this technology. By understanding how AI operates and how to best deliver medical and financial documents to an insurer, you can expedite claim progress and reassure clients of its benefits and step in when personal advocacy is needed.

Consolidation in the Industry

Mergers and acquisitions continue to shape the life insurance landscape, with insurers selling, acquiring or merging to achieve greater scale and efficiency given the commercial challenges with the market size.? More will happen in Australia in this space. Insight for Advisers: Change is certain and an opportunity, be across it. Consolidation can impacts policy premiums, terms, underwriting processes, and service delivery. By staying informed, you can guide your clients through transitions with confidence.

Stricter Underwriting Guidelines

Insurers are tightening medical, occupational, financial and pastime-related underwriting rules to support long-term sustainability. While these measures may make cover harder to secure for some, they help stabilise the industry and mitigate risk. Insight for Advisers: The key is preparation. By gathering detailed client information upfront, you can anticipate challenges, advocate for the best possible outcomes and educate clients on expected outcomes.

Final Reflections

Life insurance continues to be amazing and is more than just a product; it’s a promise—a safety net when life takes unexpected turns. As advisers, we hold a unique responsibility to guide clients through advice, review and claims amongst the changes ahead, ensuring their futures are secure.

The road forward is full of opportunity for those willing to embrace change, leverage innovation, and strengthen the relationships that sit at the heart of our work. After all, life insurance isn’t just about policies; it’s about protecting lives, businesses, and legacies.

I am excited to lead Avanir into 2025, ready to continue contributing to shape the future of life insurance with passion, purpose and care.