Are you the 1 in 4 paying 400% more for your life insurance?
Holding Life / Total and Permanent Disability insurance ‘within’ your Superannuation, can be one of the most economical methods of obtaining life insurance. In this type of ‘group insurance’, high risk members can pay almost double what a low-risk member pays. It’s vital that members are categorised correctly when allocated these insurances.
The productivity commission has investigated Superannuation and recommended a review be undertaken before the end of 2022 to “evaluate the effectiveness of initiatives” in group insurance, but despite Financial Services Ministers on both sides of parliament agreeing that group insurance in Australia doesn’t work in its current form, a government inquiry has not been approved.
In mid-2019 however, several reforms were initiated to drive competition and increase transparency and choice. Fees on low balance accounts were capped, members can no longer be charged when switching funds, duplicate low-balance and inactive accounts can now be more easily consolidated to a current superfund, and trustees who don’t act in members’ best interests are penalised.
ASIC have completed their own investigation into group insurance cover and found that this type of cover is often poorly explained to members and poorly designed, based on inaccurate member statistics. Members are often being placed, by default, into an occupational category that doesn’t match their actual occupation.
This can mean that because members aren’t asked enough questions about their exact occupation, they end up being classified as being at higher risk than they actually are – and end up paying more for their insurance premiums.
Contact us to see if you are being charged correctly for insurances held within your Superannuation.