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Most group insurance provide cover for COVID-19
Most group insurance policies negotiated by superannuation funds on behalf of their membership have always and will continue to provide cover for all health-related problems, including COVID-19, according to a lawyer.
Berrill and Watson Lawyers principal, John Berrill, said there had been a lot of misinformation around pandemic exclusions in group insurance in super as associations and super funds published statements that have confused and panicked super members.
Berrill said no group policies had general exclusions for COVID-19 related illnesses and none had general exclusions for pandemics – though these existed in some travel insurance policies.
“Life insurers will still make underwriting decisions for individual policy applications and for those applying for extra units of cover in group policies, but it is simply not correct to say that many (if any) super fund members will be left without valuable life and disability cover,” he said.
“There have been no reported claim rejections to date and very few are likely in the future.
“The much greater risk of member’s not being covered comes with the removal of default insurance cover on small accounts from April.”
Berrill noted that unlike individually underwritten policies, group policies invariably did not exclude pre-existing conditions or particular injuries or sicknesses in providing default cover.
“In the AIDS crisis, some insurers did adopt two-year HIV/AIDS-related exclusion clauses but when challenged (including by yours truly), they quickly disappeared,” he said.
“One or two funds do have general pre-existing condition exclusions (e.g. MLC Superannuation plans) and after the introduction of Choice of Fund in 2005, most funds have insurance with an “at work” test of capacity for cover to commence.”
Berrill said insurers and funds had justified the limitations as an anti-selection measure necessary to hedge against people taking out cover when they knew or suspected they had the virus.
“Given the dire warnings about potential large loss of life from Covid-19, including those of working age, a very narrow exclusion clause aimed at limiting members taking out cover when they already have the virus may be justified,” he said.
“Some funds have limited the exclusion to not apply to new members joining via employers’ default arrangements (e.g. Q Super) and other funds/insurers have not activated the pandemic exclusion clauses inherited from previous insurance arrangements (e.g. TAL with UniSuper, NGS Super, TWU Super and Prime Super).
“HESTA, Colonial First State and Care Super have also announced the removal of their limited pandemic exclusions. The funds should amend their product disclosure statements to reflect the changes.”
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