Insurance defaults could be robbing your super savings

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The Australian Securities and Investment Commission (ASIC) has urged superannuation trustees to change the way they apply default insurance settings after finding that many members were being overcharged.

ASIC’s Superannuation Member Experience Report found that many insurance holders were added as blue-collar workers and smokers by default, which resulted in them being charged much higher premiums.

In one case that went before the Superannuation Complaints Tribunal (SCT), a worker had been charged approximately $77,000 more than a non-smoker due to the default position, even though the member was not, and had never been, a smoker.

ASIC’s report has urged trustees to immediately stop using smokers as the default position for life cover policies, as it is no longer representative of the Australian population.

“Trustees should not presume that members smoke in determining their insurance premiums,” the report stated. “There are low levels of smoking in the community, with only 14.5 per cent of adults being daily smokers. In these circumstances, it is statistically appropriate to assume a person is not a smoker, in the absence of other information about that member or that group of members.”

ASIC Deputy Chairman Peter Kell said that he expected the Insurance in Superannuation Industry Working Group to consider the report’s findings, adding that there were also other actions underway to redress the issue of defaults.

“Inappropriate defaults can be adverse to consumers, as they are unlikely to notice the change in status that has been applied to their member account and take action to fix the issue. We are taking follow-up actions with funds about the issue of defaults,” Mr Kell said.

“We intend to make public the results of our 2017 project work. Now is the time for trustees to consider whether their practices are in the best interests of members, as well as whether their members are adequately informed of decisions affecting them.”

Has your super fund ever asked if you were a smoker or blue-collar worker? Will you investigate your insurance to see if you were charged higher premiums?

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Written by Ben

6 Comments

Total Comments: 6
  1. 0
    0

    How would you know? Its just included in the super bundle along with the fees.

  2. 0
    0

    I am in an Industry fund and have never been asked. It is low fees and excellent returns. Why anyone would use private funds is a mystery.

  3. 0
    0

    I cancelled my life and income protection insurance when I had no dependents and was over the age when income protection can be paid. It is easy to do. Just go online or ring for the forms.

    • 0
      0

      I also cancelled my life and TDP insurance because I am the only person I have to worry about. I kept income protection and will do so until I retire as a ‘just in case’. I am just a few years too young to have to start drawing on my super at this stage and also too young to apply for a government pension (not sure I would get that anyway). At least if the need arose I would have 5 years income before having to rely on super savings.

      Life insurance is pointless for me – I have no debt or family to support and TPD is almost impossible to claim on. If I was too injured to work for example the income protection would kick in anyway. No need to pay for belt and braces!

    • 0
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      Good thinking KSS. I also kept income protection while working permanently.

  4. 0
    0

    It looks almost the same like website https://spielautomat-casinos.at/ steals your money. So be careful!


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