Super insurance should be tied to Tax File No: analyst
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.
AUTHOR
Nicholas O'Donoghue
Nicholas is a journalist for Money Management and Super Review. Nicholas has several years experience as a journalist, reporting and managing websites for various news publications covering the medical and pharmaceuticals sector.
Recommended for you
The insurance company has joined this year’s awards as a principal partner.
The $135 billion fund has transitioned away from TAL Life Insurance following an “extensive tender process”.
The $80 billion fund is facing legal action over allegedly signing up new members to income protection insurance by default without active member consent.
In a Senate submission, the Financial Services Council has once again called for further clarification that the government will assess the consumer outcomes of group insurance against the enshrined objective of superannuation.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
215.17 3 y p.a(%)
2
Loftus Peak Global Disruption Fund Hedged
118.15 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
75.00 3 y p.a(%)
4
UBS Solactive Global Pure Gold Miners UCITS ETF Dis USD
61.11 3 y p.a(%)
5
Global X Ultra Long Nasdaq 100 Complex ETF
60.93 3 y p.a(%)
