Insurance payout not rare for Aussies
The burden of under insurance on society and government resources would be significantly greater without insurance in superannuation, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA’s latest report on insurance in super by its director of research, Ross Clare, found under insurance in relation to death, total and permanent disablement (TPD), and income protection costs the government more than $1 billion annually in additional social security payments.
Clare noted that receiving an insurance payout was not a rare event.
The report found in the 2015/16 financial year, around 16,000 TPD benefit payments worth more than $1.7 billion were made from super funds to members. More than 18,500 life insurance claims and nearly 37,000 income protection claims were paid. Total benefits paid amounted to about $5 billion.
The ASFA analysis said that over a work life of around 40 years:
- A fund member with an income protection policy on average has a 25 per cent chance of having a benefit being paid to them in the context of a temporary disability or medical condition;
- Around five per cent of fund members over a working life will claim a TPD benefit; and
- Around five per cent of fund members will have an insurance policy death benefit paid to the fund member’s beneficiary or beneficiaries or to the individual in the form of a terminal condition payment.
“Premiums for a given level of cover are lower across age categories between 30 to 60 years, for both genders,” he said.
For women, the difference in premiums ranged from around 25 per cent to 55 per cent, increasing with age. For men, the difference raged from around 35 per cent to over 60 per cent, also increasing with age.
Clare noted that funds were working to make it easier for members to opt out from or otherwise change their insurance cover using a variety of easily accessed methods.
“In addition, many funds have reviewed and revised their insurance arrangements to better align with the needs and circumstances of their members,” he said.
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