Superannuation fund HESTA has announced that it will increase its standard group insurance premiums for the second time in a year, effective March 01.
HESTA's standard insurance cover, which eligible members receive automatically upon signing up unless they make a decision to opt out, includes two units of income protection (IP) and death cover but does not include total permanent disability cover (TPD).
For most members with the standard cover, overall insurance fees will increase from four cents to 22 cents a week across all age groups on a net insurance fee basis. The IP in the standard cover will also have lower fees, higher monthly benefit payment (up from $475 to $500), and shorter benefit payment period (five-year cap compared to the previous period of up-to age 67).
“This change [shortening of the IP benefit period] was based on analysis that showed that 70% of members now claim a benefit for less than five years. Continuing to provide income protection cover to age 67 would have meant significantly increasing premiums. However, existing members can choose to continue this level of cover, if they wish,” said HESTA chief operating officer Stephen Reilly, as reported by Financial Standard.
The death coverage fund will keep the maximum cover steady at $3 million but increase fees for the cover.
Reilly said it was too early to say how COVID-19 would impact HESTA's insurance premiums.
“Changes to HESTA's insurance on April 01, 2020, were impacted by legislative change that meant fewer members were insured. We worked closely with our insurer to minimise changes to insurance pricing, which included a decrease in the cost of death cover. While there was an increase in the cost of income protection cover, there was no change in fees for total and permanent disability,” he said.
“It's still too early to see the full impact on insurance pricing from COVID-19. However, our analysis shows the loading impacting our members was in line with or below current industry price impacts.”
