POWERED BY MOMENTUM MEDIA
Scope to customise insurance offer under MySuper
Insurance might be the defining differentiator for a superannuation fund's MySuper product, according to Chant West's head of research Ian Fryer.
Fryer said that while asset allocation and investment philosophy had a huge impact on the performance of super funds, insurance was visible and there was a lot of scope to customise cover under MySuper rules.
"One of the main areas of differentiation could be this ability to vary cover and how much cover people are going to have," he said.
The wide range of default and automatic acceptance limits (AALs) that was already apparent in the industry could be a main differentiator, he said.
"Some funds are providing very low amounts of default cover, some funds are providing reasonable amounts, some funds are allowing you to dial up to $1.5 million within 60 to 90 days of joining," he said.
Fryer said the ideal insurance structure would include a reasonable level of default cover, but not too much that a large proportion of members were over-insured. Members should also have the ability to dial-up to a reasonable AAL, he said.
Fryer said 26 of the top 30 industry funds allowed members to dial-up within 60 or 90 days of joining to get higher levels of insurance cover.
He said ten of the top 30 white collar industry fund's AAL cover had some "shape" to it and catered for specific demographics, but very few had reasonable cover for members over 50, which was driven by a focus on cost and not members' needs.
Life events cover was critical, Fryer said, and while 18 of the top 30 funds allowed access to life events cover, one or two units was the general limit on increases. He said seven of the 18 allowed a 25 per cent increase in fixed cover up to $1.5 million, which was more reasonable.
Less than half the top funds had default income protection cover, with the median default for an industry fund coming in at $2,000, while two-thirds had AAL on income protection of $8,000.
Fryer said the real task was in communicating the cover to members and getting government to promote insurance through super.
Fryer was speaking at the AIA Group Insurance Summit in Sydney.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
