Australians are at risk of losing their life insurance cover when superannuation changes come into effect in July, as AIA Australia, Commonwealth Superannuation Corporation (CSC) and Mercer launch a ‘click, check and protect’ campaign.
From 1 July, 2019 the Government’s ‘Protecting Your Superannuation’ laws would remove automatic life insurance cover from members with an account that was inactive for 16 months or more.
The three organisations said they supported the Government’s aims as they prevent unnecessary balance erosion and protect small balances but they worried it could leave Australians uninsured in times of need. Around $500 million is paid by insurers in claims to inactive members each year.
Their campaign aimed to raise awareness of the upcoming changes and inform individuals of how they can review their personal circumstances, encouraging them to ‘click, check and protect’ to understand their cover.
AIA Australia chief executive Damien Mu said: “We understand that members can sometimes be less engaged with life insurance based on over optimism about their risk, or apathy, which is why default insurance in superannuation is by far the most sustainable system for mass consumer protections, benefitting everyone in society by providing cover to all.
“Our concern is that a large majority of impacted members won’t be aware of these changes until it’s too late, only discovering that they are uninsured at their time of greatest vulnerability after a serious event has occurred.”
“Insurance in super can be a valuable benefit for many members and there are some who may be negatively impacted as a result of unintended consequences brought about by the changes, such as members who have intentionally left their super savings in an ‘inactive’ account to retain access to a specific insurance coverage,” said Mercer Australia chief executive Ben Walsh.
“While all members should review their insurance benefits on an ongoing basis, those who will lose their default insurance cover as a result of the changes in particular should review their needs.”