The Government’s changes to insurance inside superannuation may come back to bite it amid the COVID-19 fall-out with financial advisers pointing out that some superannuation fund members are at risk of unwittingly having their insurance cover cancelled from tomorrow.
That is when the Government’s Putting Member’s Interests first legislation cuts meaning that members with low balances who have not specifically opted in will have their cover cancelled, as of tomorrow (31 March).
In doing so, they have pointed to notifications from major insurers, including MLC Life, which has written to advisers stating: “On 31 March, 2020, some of your clients may have their insurance in super cancelled in line with the new Putting Members’ Interests First (PMIF) rules”.
“Clients with low super balances, who haven’t told us they want to keep it, will have their insurance cancelled. This doesn’t apply to any insurance benefit for which the employer fully pays the premiums,” it said.
The PMIF legislation is intended to protect the account balances of those holding less than $6,000 unless they opt in.
The warning from advisers has come as a number of superannuation fund chief executives have told Money Management that while their call centres have been kept busy dealing with inquiries around investment switching and early access to superannuation, there has also been a high level of inquiry around insurance cover.
One adviser, Fairbridge Financial Services principal, Daniel Isenhood has pointed to the danger of medical personnel, particularly busy nurses who have multiple superannuation low balance accounts being adversely affected by the Government’s changes.