Consumer group Choice has questioned the value of total and permanent disability (TPD) insurance inside superannuation, arguing that it can often be “junk” insurance.
The consumer group has published an article in which it effectively accuses insurers of using the activities of daily living (ADL) test to eliminate some claims and urges consumers to discover whether they will face the standard test or the ADL test.
It said it was extremely difficult to succeed in a claim where the ADL test applied “so for some people this makes the insurance junk”.
The consumer group claimed one of the main ways insurers created junk insurance was through the “hazardous occupations” or “special risk” list.
It said many of the documents provided by superannuation funds and insurers were very long and cited AMP’s insurance guide which it said spanned 95,000 words making it much longer than the first Harry Potter novel.
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There are many other examples of junk insurance out there now too. Most life & disability insurance sold directly online, or via airline, supermarket, and health insurer "affinity" schemes, also has lots of built in exclusions making them very difficult to claim on.
Junk insurance has boomed in recent times thanks to the misleading and deceptive campaigns run by organisations like Choice & CALC against professional advice and quality products. It is utterly hypocritical for Choice to be complaining about junk insurance when they have had such a huge role in its expansion.
Choice is NOT a consumer group anymore. It is a political activist group that does more harm than good for consumers.
Choice, having had a role in shaping an environment for junk insurance to prosper and adviser numbers to reduce along with loss of standing, is now ready to sell articles to the general public. No conflict?
Maybe Choice should have a crack at Aus Super, and Sun Super, but as you can see they have other motives....
Well, ASIC allow Choice to consult with them so I don't reckon Choice will be looking at AustralianSuper any time soon based on the recent appointment of that fund as the default fund for ASIC employees.
Irrespective of the AustralianSuper TPD definition, this is guaranteed not to be looked at by Choice.
Funny, that because ASIC switched their super to Australian Super, that they have effectively downgraded the quality of their own TPD. And I bet they are none the wiser.
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