PROFITS FOR
MEMBERS.

Now that’s what you call putting Members first.

Most life insurers allocate their profits to their shareholders.

But we’re different. As a mutual we don’t have shareholders. Which means we’re free to share our profits with the people who genuinely contribute to our success, our Members.

HOW OUR PROFIT- SHARE WORKS

Every Member contributes. Every Member benefits.

When you take out a PPS Mutual policy you become a Member and pay premiums alongside every other Member.

In the first instance these premiums are used to pay claims, cover the operational costs of the business and provide capital reserves for the future. Any surplus money is deemed as profit and every PPS Mutual Member is entitled to a share.

Profit is retained, invested and assigned.

This profit is retained in a Profit-Share pool which is invested by the PPS Mutual Benefit Fund.

Then each year an assignment is made to your individual Profit-Share Account together with your share of any investment returns. The amount of money in your Profit-Share Account continues to accumulate providing you keep your plan in force.

The balances of the Profit-Share Account are not guaranteed and can be affected by, amongst other things, positive and negative investment performance and claims experience.

You can start to reap the rewards in 10 years

After 10 years you can take up to 5% of your balance each year. After 20 years, or on reaching the age of 65, you can access the full amount in the Profit- Share Account.

The full amount is also payable on the earliest of death or terminal illness or payment of a full Total and Permanent Disability (TPD) or Trauma Insurance benefit if such an event occurred and no other plans are held which would continue.

The Profit-Share Plan is also designed to be an ‘eligible policy, such that, broadly, payments from the Profit-Share Account after 10 or more years of continuous coverage, should not be assessable for income tax purposes.

No penalties for claiming

Your share of the profits are not affected if you claim.

It’s important to note that any claim you make on your PPS Mutual Insurance plan has no direct effect on the amount of Profit-Share available to you.

However it’s worth remembering that any claim does of course diminish the overall pool of money from which profits are drawn.

If you cancel your policy, you miss out.

As a Mutual organisation we rely on Member loyalty to support our business model.

So, if you cancel all your PPS Mutual plans within 10 years of joining, the Profit-Share Account terminates, and the total amount is returned to the overall Profit-Share pool to be reallocated amongst the remaining Members.

FREQUENTLY ASKED PROFIT-SHARE QUESTIONS:

What is my Profit-Share Account?

One of the key principles of mutuality is that profits are shared with Members. Like all insurers the premiums we receive are used to pay claims, set up reserves to pay future claims and to cover expenses. What remains is profit. For most life insurance companies these profits would be allocated to shareholders. With PPS Mutual, these profits are shared with Noble Oak and with our Members by way of a Profit-Share Account.

A profit-share is calculated for each Financial Year (1 July to 30 June) based on a number of sources including operating margins, claims experience and investment returns. We expect to announce the profit-share rates and the amount assigned to each Profit-Share Account around 30 September each year.

The profit-share assigned to individual Profit-Share accounts will be based on the Premiums Paid in relation to that Financial Year and Balance of the Profit-Share Account.

The profit-share assignments can be positive or negative and the balance of the Profit-Share Accounts are not guaranteed, however the Profit-Share Account balances can never go negative.

We cannot predict what future Profit-Shares will be. These will be based on a number of sources including operating margins, lapse experience and claims experience. The profit-share assignments can be positive or negative and the balance of the Profit-Share Accounts are not guaranteed, however the Profit-Share Account balances can never go negative.

We assign profits on premiums that relate to insurance within the financial year. This will include all premiums paid for monthly premium cases. For annual premiums, it is only the portion in relation to the current financial year that are included. The portion in relation to the next financial year will be included in the next Profit-Share assignment.

There are two circumstances in which we “gross-up” the premiums paid in calculating the Profit-Share assignment:

  • First, if you have had premiums waived during the year due to being disabled, then we will include the premiums waived in the premiums a profit-share is based on – our philosophy is not to penalise our Members’ profit share because they have been unfortunate enough to claim.
  • Secondly, if you have sacrificed commission which results in a reduced premium for the client (this could be because you operate on a fee for service model) then we will assign profits based on the premium that would have been payable if full commission was paid. This ensures we treat those operating on a fee model and those on a commission model equitably. Also if you are simply receiving a reduced commission the client still gets the full profit-share assignment they would if full commission was paid.

Initially, they are being invested in short term and low risk assets (such as Term Deposits). As the Fund grows, a significant portion of the assets is likely to be invested in longer term assets (such as equities and property trusts) with the aim of achieving higher long-term growth.

The balances of the Profit-Share Account are not guaranteed, and the assignments can be positive or negative in any future year, however the Profit-Share Account balances can never go negative i.e. less than zero.
Also, the Profit-Share Account will lapse if all the insurances on the life of the PPS Mutual Member lapse. At this point, only accessible balances (see question further below) will be paid out. The amount forfeited will be shared amongst the remaining Members as part of the next Profit-Share assignment.

For payments made during the year the balance of the Profit-Share Account will be adjusted by interim profit share rates (to reflect the operating profits and investment returns between the start of the most recent financial year and the date of death).

If you don’t withdraw your whole balance upon becoming eligible to do so, any balance remaining in your Profit-Share account(s) will continue to accrue investment returns. Additionally Profit-Share will accrue on any further premiums you pay.

You can withdraw some or all of your Profit-Share Account balance from the earliest of:

  • you reaching age 65 (all of your balance can be withdrawn)
  • 10 years elapsing from your first Profit-Share Plan commencing (5% of your balance can be withdrawn each year over the next 10 years)
  • 20 years elapsing from your first Profit-Share Plan commencing (all of your balance can be withdrawn)
  • you pass away, become terminally ill, or receive a full TPD or Trauma benefit payment resulting in all your cover terminating (all of your balance will be paid)
  • all your covers expire (all of your balance will be paid)

If you have met the criteria for the release of your Profit-Share Account balance, then you can withdraw some or all of the balance by contacting Member Services on [email protected] and calling 1300 401 436.

If your Profit-Share Plan is a Non-Super Plan, we may request you to nominate the bank details for the account into which you wish your Profit-Share Account balance to be deposited. If your Profit-Share Plan is an SMSF-owned Plan, we may request you to provide the details of the bank account of your SMSF in which we can deposit your Profit-Share Account balance.

If your Profit-Share Plan is owed by PPS Mutual Super Fund, we will request you to submit details of a complying superannuation fund into which we can rollover your Profit-Share Account balance.
Releases usually take 15 business days but may take longer for releases into a complying superannuation fund.

If this happens, you will forfeit any Profit-Share that was not eligible for release before you cancelled or lapsed all your covers.

If any portion of your Profit-Share Account balance was eligible for release before your date of cancellation or lapse, we will attempt to contact you to seek payment details and release the balance to you 120 days after your last cover was cancelled or lapsed. If we cannot reach you, we will hold any amount eligible for release until we are able to release this amount to you. The amount will ’crystallise’, meaning it will not be subject to annual assignments and will stop accumulating any investment returns, as at the day that you cancelled or lapsed all your covers.

If you reinstate one or more of your covers within 120 days of cancelling or lapsing all your covers, you will be re-assigned your original Profit-Share Plan(s) and unreleased balance(s). However, if you reinstate your cover(s) after the 120-day period, you will forfeit any unreleased balances you had previously accumulated and will be assigned new Profit-Share Plan(s).