While there is a compelling case for superannuation funds to provide group life insurance, there is a far less compelling case for them seeking to provide income protection insurance, according to actuarial consultancy, Rice Warner.
In an analysis published this week, Rice Warner has stated that the reality is that income-protection insurance is difficult to offer efficiently within superannuation for such reasons as the:
It said that if funds wanted to provide income protection cover, they needed to be smarter about segmenting members and tailoring the cover to different groups.
"We believe funds can place more of an emphasis on educating and advising members, including through fund advisory groups, about how much income-protection cover is needed for their circumstances," the Rice Warner analysis said.
"Second, advise members, again through fund advisory groups, about the most cost-effective way to obtain that cover."
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