Young Australians are being "ripped-off" by the current superannuation life and total and permanent disability (TPD) insurance arrangements, according to Good Super chief executive, Andrew MacLeod.
Speaking at the start of the Financial Year, MacLeod called on Assistant Treasurer, Josh Frydenberg, to adjust the rules surrounding TPD insurance, so that Australians with multiple super accounts do not end up paying numerous TPD policies.
"We have suggested that a Tax File Number be associated with every Life Insurance and TPD policy and that no duplicate policy may be issued without specific opt-in of multiple products. This is in contrast to the opt-out model that Australia now has," he said.
"Many Australians have more than one superannuation account. In fact according to the recent Murray Financial System Inquiry, there are nearly three superannuation accounts for every employee in Australia. Each might be deducting premiums for the same product costing that person thousands.
"Assuming a hypothetical 20-year-old white collar non-smoking male has three superannuation accounts and a default level of insurance bundled with each account his super, he may potentially erode up to $108,000 worth of retirement savings over a 45 year period just by paying these additional premiums and administration fees."
MacLeod said that while there was a focus on "unnecessary fees from multiple superannuation accounts", he stressed "unnecessary insurance" was "the far bigger destroyer of wealth".
Comments
Has Andrew McLeod checked the underinsurance figures for disability insurance lately. The gap is huge and the more TPD policies the better until the member takes enough interest in their personal affairs to sort things out.
Thommo spot on following on from that , this assumes that these clients never claim or if they do they are unsuccessful so never get the benefit of getting a payout. Big assumption there!
This isn't the same product - those three accounts this guy talks about will pay 3 amounts of insurance. Many people rely on this default cover to get close to their properly insured amount. What about the under-insurance crisis in Australia?
Add new comment