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Insurance within super should remain ‘opt out’
The Government should not be swayed by arguments to allow superannuation fund members aged under 25 to opt out of insurance within superannuation or move to opt-in arrangements, according to the Breast Cancer Network of Australia (BCNA).
The BCNA has used a submission to the Parliamentary Joint Committee inquiry into the Life Insurance Industry to point to the significant hurdles confronting young women with breast cancer in dealing with the superannuation system.
In doing so, the BCNA has recommended:
- That group insurance attached to superannuation remains an opt out model for all Australians;
- The introduction of capped death benefits for young adults within group insurance policies that automatically increase once they reach their twenty fifth year; and
- The decoupling of death cover and terminal illness cover under group insurance schemes.
The BCNA used its submission to point to the difficulties already being experienced by women suffering from breast cancer, including superannuation funds denying them access to insurance cover.
“It is of great concern to BCNA that, despite the existence of group insurance attached to superannuation, a significant number of our members report difficulty accessing their policies when they need to,” the submission said.
It said a 2014 BCNA survey of 582 people living with metastatic breast cancer found that 29 per cent (170) had not been able to access their lump sum super through the terminal illness provisions although they had wanted to do so.
The submission said the most common reasons given were the terminology around the number of months they were expected to live and the complexity of paperwork in submitting a claim.
“Other people discussed encountering difficulties when dealing with their super fund, including poor communication, being sent incorrect forms or not receiving clear information about entitlements,” it said. “Others were unsure how their claims were assessed and what entitlements were associated with their superannuation policies, including total and permanent disability (TPD) benefits and total and temporary disability (TTD) benefits, also referred to as income protection or salary continuance.”
The BCNA submission said the organisation was delighted that in 2015 the Australian Government agreed to amend the superannuation laws to extend the life expectancy requirement of the terminal illness provision from 12 months to 24 months stating this would benefit many people living with a terminal illness.
“We remain concerned, however, about unintended consequences that have arisen from this change, particularly around access to life insurance death benefits attached to superannuation policies, which are commonly paid out only when life expectancy is 12 months or less,” the submission said.
“While some superannuation funds are re-negotiating arrangements with their insurance providers to allow death benefits to be paid to terminally ill members with a life expectancy of 24 months, this practice has not yet been adopted as an industry standard meaning people may not be aware whether their own fund has made this change.”
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