New insurance ‘opt-in’ requirements proposed by the Federal Government come into effect from 1 July 2019. Previous arrangements provided insurance as part of the super package unless members actively opted out of the insurance.
The changes are part of the Federal Government’s Protecting Your Super package that aims to protect Australians’ super savings from unnecessary erosion by fees and insurance costs.
There is a risk, however, of some members losing their insurance cover because their accounts are considered to be inactive.
From 1 July super funds will be unable to continue to provide
any insurance cover to inactive accounts unless the holder of the account elects to maintain the insurance cover. Inactive accounts are defined as accounts receiving no contributions for 16 months.
You could be affected by the changes if you have any insurance cover through your super accumulation account for death, total and permanent disablement (TPD) and/or salary continuance and your super account has not received contributions for a consecutive
16 months.
Super funds are sending multiple alerts to members who are in danger of insurance cancellation, but it is not uncommon for people to miss information in an environment of mass communication.
Women are a particular group that are likely to lose default insurance due to economic inactivity, particularly those in the child raising years of 25-54.
Further opt-in insurance changes
The Government has reintroduced further opt-in measures in a new bill, the Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019. The legislation would make all insurance opt-in for new members under the age of 25. The start date of 1 July 2019 for this legislation has now been pushed back.
With such changes on the agenda the Union encourages all members to stay in touch with your super accounts including your insurance arrangements. You are also advised to always check your insurance cover before switching or consolidating super funds to ensure you can get the death, TPD or income protection in your chosen fund.
For information about NGS’ award winning insurance see NGS Super wins 2019 Best Fund Insurance