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From July 01, the “Protecting Your Superannuation” laws will remove automatic life insurance cover from members with an account that is inactive for 16 months or more, to address the issue of inappropriate balance erosion in superannuation – changes that could leave Australians who want or require life insurance unprotected in case of a serious incident.
The nationwide campaign seeks to educate Australians about the potential to lose access to life insurance cover when the changes take effect, and to inform them of the steps on how to review their personal circumstances and make informed decisions whether or not to opt in to maintain life cover.
The campaign includes an information hub at www.checkmycover.com.au to provide Australians access to the necessary tools and information that will allow them to better understand their cover, and to determine their needs. It will also be supported by national advertising, including billboards in major cities, radio, and online ads.
The three organisations acknowledged that the “Protecting Your Super” laws will prevent unnecessary balance erosion, but also warned against the reforms’ unintended consequences.
“From July, many Australians who previously benefitted from the default system will lose access to their life insurance cover if they don’t take action to consider their needs and actively choose to maintain cover,” said Damien Mu, AIA Australia CEO. “We support the intent of the legislation, but it’s simply not the case that all members with an inactive account are without insurance needs – it is estimated that more than $500 million is paid in claims to inactive members each year. Our concern is that a large majority of impacted members won’t be aware of these changes until it’s too late, only discovering that they are uninsured at their time of greatest vulnerability after a serious event has occurred.”
“The changes are a step forward in protecting members from unnecessary balance erosion,” said Ben Walsh, Mercer Australia’s CEO.
“They address the duplication of insurance fees resulting from multiple accounts, protect small balances, and save young people from paying insurance coverage that they may not need. Insurance in super, however, can also be a valuable benefit for many members and there are some who may be negatively impacted as a result of unintended consequences brought about by the changes, such as members who have intentionally left their super savings in an ‘inactive’ account to retain access to a specific insurance coverage. While all members should review their insurance benefits on an ongoing basis, those who will lose their default insurance cover as a result of the changes in particular should review their needs.”
