Changes to SIS-related products tighten pay-out requirements
Changes to SIS-related lump sum and disability income products inside superannuation will set more stringent requirements for pay-outs, DEXX&R reports
In the latest DEXX&R Digest, the research company revealed that a number of changes to SIS-related products had been made to most individual total permanent disability (TPD) and disability income products, and group based TPD, salary continuance benefits in personal and employer super products.
DEXX&R reported that lump sum SIS changes made to inside super products varied from product to product, however, all now include wording that benefits would only be paid to the trustee if they met the SIS definition of temporary or permanent incapacity.
"For death products terminal illness benefits inside super now need to be certified by two doctors, [however] outside super this remains one doctor for most products," DEXX&R said.
"For TPD products the ‘own occupation' definition has been removed although Own Occupation continues to be available in Australian Super for low risk professionals and managers.
"In addition the unable to earn 25 per cent of income tier of the Education Training or Experience (ETE) definition has been removed from ETE definitions inside super."
DEXX&R said there had been a number of major SIS changes to disability income products inside super including the removal of agreed value monthly benefits from some products, and the inclusion of an explicit statement that the insured must cease gainful employment for at least one day in some products that only require total or partial disablement during the waiting period.
Other disability income SIS changes included:
- The removal of ancillary benefits such as accommodation benefits from most products.
- Restricting pre-disability income to that earned in the last 12 months prior to the date of disablement in some, but not all, inside super products.
- Capping benefits payable at 100% of pre-disability.
- Revisiting the long lost past and re-introducing offsets for sick, annual and long service leave that the insured is entitled to receive, irrespective of whether or not the insured elects to claim income from these entitlements.
- Limiting the definition of Total Disability to the not working and unable to do one important duty definition.
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