Age-based insurance premiums set to hit mature Aussies hard

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Industry super fund HESTA has announced a new age-based pricing model for its insurance premiums that will hit older workers in the hip pocket.

HESTA, the industry fund for health sector workers, is the fifth-largest super fund in Australia with 830,000 members and $40 billion in assets.

Under the changes to Hesta’s income protection insurance, due to come into effect in March next year, a 40-year-old member’s cover will rise from $84,000 to $85,000 as weekly premiums rise from $1.09 to $1.18.

Members aged 60 and over, who are a higher risk due to their age, will pay 21 cents a week more, $1.30 up from $1.09, for an unchanged $17,100 in cover.

The changes mean that younger workers will pay less for their insurance premiums, but they will also receive less in return. Members aged 15 to 34 will pay just 16 cents a week in premiums, down from $1.09, but will have their cover reduced from $85,000 to $25,000.

Independent research house Rice Warner analysed the impact of the age-based restructured cover and pricing. They found that under the new arrangements a typical HESTA member who started work at age 22 could pay about 10 per cent less over their working life in insurance premiums for default cover to age 67.

Those figures don’t take into account the effects on current super fund members who have paid the highest rate of insurance cover all their life, and who will be slapped with the higher premiums from March next year.

“These changes are designed to ensure HESTA members have the cover they need while retaining their ability to grow their super balances for a comfortable and happy retirement,” HESTA CEO Debby Blakey said.

“We believe we’ve reached the right balance between providing appropriate insurance cover and ensuring insurance fees do not erode account balances,” Ms Blakey said.

What do you think? Do you think it is fair that older workers who have spent most of their careers paying higher premiums are slugged more as they approach retirement?

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Written by Ben


Total Comments: 23
  1. 0

    Never had health insurance. So far have not been sorry.

    • 0

      This article doesn’t appear to have anything to do with health insurance, it is about income protection insurance.

    • 0

      Nothing to do with health cover. We would never not have this. We insure our car, our home and contents, but not our lives.
      It seems to be about life insurance.
      Other insurances are necessary.

  2. 0

    This should not matter because all insurance is crap and all insurance companies are charlatans, out to take your money. If you put aside your premiums in term deposits or blue chip investments you will get better cover for your money.

    • 0

      For those of us on limited incomes such as the pension insurance is essential as part of our budget.
      However, this article seems to be dealing with life insurance which we do not cover.
      Our home and contents, our car and our health are all insured.

  3. 0

    My dealings with income protection insurance are not good. I have never had this type of insurance but ina previous employment, I came across some people who did. The rules about getting your income paid if you are off work for any reason are horrendous. If you are sick for a week or two, forget it. All of the schemes that I have seen only kick in if you are off for a month or more, have no sick leave, no LSL, no annual leave and no Workers Compensation payments. You then have to attend to their medical staff to get a clearance as your own medical staff are not considered competent enough to decide if you can work or not.

    As regards older people having to pay more, that’s just a fact of life. No insurance company will take a risk on someone who is past retirement age for the same price as a person joining the workforce for the first time. Seems that this article is a good filler with nothing new to tell us.

  4. 0

    Income protection insurance is only useful if you have debt such as a mortgage and also have dependants. Then it makes sense to have the safety net to protect the family. And It makes sense if you are single in case of being too young for retirement so can’t claim your super or pension.
    But you don’t have to get it through your super fund. And it has always cost a lot more the older you get. Seems like HESTA are just catching up with other insurers.

  5. 0

    I have house insurance and car insurance that’s it.

    • 0

      Agree – life insurance, funeral insurance, income protection – waste of money. Better off buying a lottery ticket.

    • 0

      Agree life insurance and funeral insurance are a waste of money – we all die! However, if you are reliant on your income (before retirement) I do think for those, it is a sensible insurance to have in the event you are too young to retire, can’t work through injury or sickness and still have a mortgage. It could be the difference between keeping your home and losing it!

  6. 0

    Most pet insurance won’t insure when the dog gets beyond 12 -or 13 y.o. so it doesn’t surprise me that they don’t want to ensure us or make it more expensive when we get old. It seems fair considering the higher chances of having health problems. Nevertheless, I’ve never had health insurance. Unless you have a congenital defect or work in a hazardous environment, I think exercise and putting money into a healthy lifestyle is a better investment.

  7. 0

    Older Australians seem to be fair game in every aspect of their lives. When are we going to group together and form a block which destroys businesses and governments who try it on?

    • 0

      Good idea Mick

    • 0

      Count me in, Mick.

    • 0

      Same thought came to my mind. MICK. People need to act and send a message to such greedy exploiters!

      Recently, NAB announced the retrenchment of thousands of their staff after declaring a huge profit. I did mention on this web site that people should take their business elsewhere – are many of us still with NAB as customers? If so, don’t you care about your fellow Australians losing jobs to outsourced low-paid workers in Asia?

  8. 0

    Insurance is a SCAM. The sooner there’s an enforceable Royal Commission into that industry sector, the better (along with banks and telcos).

  9. 0

    Speaking of insurance premium in general. Have you noticed the levies imposed by insurers?
    -Comprehensice Car Insurance Fire Service levy> $4.72 including GST
    -Contents Insurance Fire Service Levy > $ 55.48 including GST
    -CTP/Green Slip Insurance MCIS Levy > $91.16 (GST Exempt)
    This adds up to $151.36 extra in cost for the year. As an aged pensioner that is an extra cost we all could do without.
    It is also interesting to note that two items get charged GST and one doesn’t !!!
    Do Insurers pay the whole amount of levies charged back to the State Government or to the pertaining authorities or do Insurers profit for themselves out of it ? Where Insurers charge GST on levies do the Insurers get GST Tax Credits for it?
    Are Insurance customers being shafted with levies?

  10. 0

    Opt out of your super fund insurance – problem solved

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