How well are your insurance needs covered?
Many of the clients we see have insurance in their industry super funds, and for that reason (often wrongly) believe ‘they have adequate insurance’. This type of insurance cover they have is known as Group Insurance and can be a real danger if you don’t know exactly what you are covered for and what you are not covered for, and you don’t review this regularly.
With Group Insurance in an Industry Super fund it’s important to remember the following:
– you are covered under the policy but do not own the policy and you are not in control of changes to the policy terms and conditions
– pricing is not individual, rather it is based on what is set at policy level, meaning low risk young and/or healthy members will offset the price of unhealthy and/or older members with higher risk factors
– it is nearly always owned in superannuation, meaning the policy terms are also limited by, and altered to suit superannuation laws
– the insurer can be changed regularly, in consultation with the trustee, and this can trigger a review and changes to the cover terms and conditions
– it provides a useful default level of cover for many Australians, but is generally not reliable in all circumstances
– the policy is not underwritten and therefore it’s not until claim time when you will know if you are actually covered, which means no certainty/peace of mind
Of particular concern to us are the recent changes by most Group Insurers to Total & Permanent Disability (TPD) definitions, which are now worded in such a way that only the most extreme TPD claims are likely to be paid out. These types of definition changes are announced very discretely by Group Insurers/Industry Superannuation funds meaning virtually all clients are unaware when changes are made to their policy.
Further, because of the simple ‘tick a box’ insurance offering by Industry Super funds in the past, there has been a significant increase in claims within Group Insurance over the last several years, which has led to correspondingly large increases in the renewal costs of this type of insurance. All this has led to fully underwritten retail insurance now being highly competitive and offering superior policy benefits, unparalleled certainty, and all importantly peace of mind when compared to Group Insurance.
At Initiative we believe it’s important you regularly consider your insurance requirements carefully to ensure you have the protection in place you require. This protection is critical to your longer term financial security. To ensure you and your family are adequately protected for your situation, please call our office on 07 5437 8888 for an obligation-free review.
James Mulhearn CA – Director