The 36% hit to insurance inside super coverage
The degree to which Government policy changes and particularly the Coalition’s Protecting Your Super and Putting Members Interest First measures have impacted insurance inside superannuation has been laid bare by new research.
The research, undertaken by the Association of Superannuation Funds of Australia (ASFA) has confirmed a 36% reduction in the number of lives insurance through superannuation for death benefits with a similar decline for Total and Permanent Disablement (TPD).
Releasing the research today, ASFA chief executive, Mary Delahunty said the issue would be discussed at a conference in Sydney today.
She said that Australia now faced a situation where fewer Australians and their families are covered by group insurance through superannuation.
Along with identifying the 36% reduction in coverage through group insurance, the ASFA research also pointed to the flow through effects on the broader economy saying the legislative changes had meant that there were 5,000 sets of beneficiaries of death benefits who missed out on payments of $655 million in aggregate in 2022-23.
The ASFA analysis said the reduction in the number of lives insured had been remarkably in line with ASFA’s expectation at the time of the legislative changes, which was a reduction of around 5 million individuals.
They’re not getting enough group insurance commissions to help cover their admin fee hikes lol
More Govt intervention works so well yet again.
Added to the LIF disaster for retail Advised Life Ins also decimated.
And what there is over 50% loss of Australians Life Insured.
Great job Canberra morons.
I suspect that the trustees were very seldom ever required to pay out death benefits for under-25 members in their funds in the old days of default cover for all. With the obvious exception of car accident death. Frankly those default premiums were money for old rope, because of the low level of death, and TPD claims associated with the illness for under 25s. It was not good use for a parent who is apprenticed son was rendered a paraplegic , in a motor vehicle accident except, where the parents were looking forwards to care for a very long time and welcomed any TPD benefit that was payable. Harsh but fair!
Morrison and Frydenberg always hated the industry funds and this cancellation of default cover for under 25s was a way to reduce their profits, by just a little, knowing full well that no young tradie, who was not advised, would ever consider taking up the insurance option with the trustee.
This policy development was on similar lines of course that to the later $10,000 tranches available to super fund members during Covid, which put $35 billion into the economy and had the added attraction of causing grief and angst with the industry funds and their unlisted assets. All good fun.
Naturally enough, with Labor in power, the ISF now wants to reverse that policy. I suggest next cab off the rank might be to reverse the current practice of allowing funds to be rolled out of accumulations to pay for death and TPD cover outside of the fund.
More examples of brilliant policy coming from Gov’t.