Several industry players are acting to raise awareness of the potential loss of insurance cover through super for some Australians under the government’s “Protecting Your Superannuation” laws due to take effect on 1st July 2019.
The legislative changes will remove the automatic life insurance and total and permanent disablement cover provided by super funds if a member has a super account that is inactive. An inactive account is defined as one where no rollovers or contributions have been received for 16 months or more.
AIA Australia has partnered with Commonwealth Superannuation Corporation and Mercer to produce an awareness campaign to inform individuals of the changes and provide the tools for them to evaluate their need for cover through a webpage www.checkmycover.com.au
While supporting the intent of the legislation, which is to prevent the erosion of super balances by insurance premiums, AIA Australia CEO Damien Mu notes that “the changes could leave Australians who want or require life insurance uninsured at their time of greatest need.”
The Association of Superannuation Funds of Australia (ASFA) along with the Financial Services Council are also lifting public awareness with a “When did you last check your super” advertising campaign and website www.timetocheck.com.au
ASFA research has revealed that while there are more than three million Australians who will lose their default insurance due to inactive accounts, more than half (53%) of the respondents surveyed were unaware of the changes due to come into effect on 1st July. Of those who were aware, only 1 in 5 felt they had a good understanding of the impact of the changes.
Dr Martin Fahy, chief executive of ASFA, stated “This legislation has been introduced for very good reasons; however the time frame for implementation has meant that it has been challenging for superannuation funds to engage their members to ensure they understand the consequences of the changes in just a few short months.”
For example, those who have a pre-existing health condition and lose their default insurance cover due to having an inactive super account could find they are unable to find equivalent cover elsewhere or only at a higher premium. To maintain their current insurance cover these individuals would need to “opt-in” before the July 1st deadline.
If you think your super account might fall into the “inactive” category the following actions are recommended:
- Read any communications from your super fund in the form of letters, SMS or email
- If no communications are received make sure your super fund has your correct address details or contact your super fund directly
- To check what super accounts you have you can link your mygov account to the ATO and view all of your super accounts
- Evaluate your need for insurance and compare this to the insurance cover from your super funds and any other policies you have or could take out
- If your super account is inactive and you want to keep the insurance cover from your super fund you will need to “opt-in”. You can do this by contacting your super fund in writing or by electronic means before 1st July
- If your super account is inactive and you are happy to let the insurance cover lapse you don’t need to do anything
You can find other online tools on the Insurance Watch website to help you review your insurance including an Insurance Needs Calculator, Pros and cons of retail and super fund insurance and Insurance Premium Comparisons.