Super insurance should be tied to Tax File No: analyst

12 March 2015
| By Nicholas |
image
image
expand image

Australians could be losing hundreds of thousands of dollars in retirement savings by having multiple sets of total and permanent disability life and income protection through numerous superannuation accounts, an investment analyst believes. 

Good Super managing director, Andrew MacLeod, called for TPD life and income protection insurance policies to be tied to Australians' tax file numbers, with second and third policies made opt-in, instead of opt-out as is currently the case. 

"The average Australian has three superannuation accounts," he said. 

"If you have a mid-level coverage for TPD life and income protection insurance in each of those accounts you'll pay about $24 a week in combined insurances - that's $12000 a year per set of insurances, multiplied by three sets of super accounts, if you have insurance on all three. 

"Let's assume as a 20-year-old you need on set of insurances¬ that means $2400 worth of premiums is unnecessary¬  $2400 on eight per cent compounding over 45 years is $118,000 of lost capital on retirement.  

"If you do nothing about it over the entire period of your super it could be north of $1 million of lost capital for a product you're already paying for. 

"[If you] make it compulsory to have tax file numbers associated with TPD life and income protection insurance and then make people actively opt-in to have more than one account¬ if you change that you'd solve the problem on that insurance issue." 

While MacLeod has called for in super TPD life and income protection to be optional for Australians with more than one super account, he said there was a "huge under insurance problem" in Australia.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

10 months 2 weeks ago
Kevin Gorman

Super director remuneration ...

10 months 3 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

10 months 3 weeks ago

The superannuation industry will be judged by its member services rather than how effectively it accumulates wealth, according to Stephen Jones....

17 hours ago

APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers....

17 hours ago

The profit-to-member super funds are officially operating as a merged entity, set to serve over half a million members. ...

3 days 16 hours ago