APRA reveals significant impact of Govt policy on super

The impact of the Government’s policies on insurance cover within superannuation has been laid bare by the latest data from the Australian Prudential Regulation Authority (APRA).

The data, covering the 12 months to 30 June last year, revealed major reductions in the number of members covered by insurance – down over 30%.

The APRA data stated that the number of member accounts covered by life insurance decreased by 32.7% over the year to June 2020 from 15 million accounts to 10.1 million accounts.

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It also revealed the number of member accounts covered by total and permanent disability (TPD) insurance decreased by 32.7% over the year to June 2020 from 13.2 million accounts to 8.9 million accounts.

What is more, the APRA analysis left no doubt as to the reasons for the insurance cover reductions, stating they were “primarily the result” of the Government’s Protecting Your Super (PYSP) legislative initiative and its Putting Members’ Interest First (PMIF) reforms.

The APRA data revealed the number of member accounts decreased by 11.7% over the year ended 30 June 2020, from 26.4 million to 23.3 million driven, to a significant extent, by sweeps of inactive low-balance accounts the ATO under the PYSP reforms.

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I want to see how many clients had TPD claims and missed out due to the new rules, I helped a client and they would have missed out on 800k for a TPD if they had not came into our office

I think this happens a lot. I have had at least two in the last couple of years. One was a guy trying to do his own financial planning, the other was an industry fund member. Both had their TPD benefits cancelled earlier.

Why are there so many ambulance chasers advertising on TV?

Simple fact is, the people who are healthy prior to their benefits being cancelled will no longer be able to claim in the future, and I expect claims will reduce by around 32. 5%. Those that weren't healthy at the time probably still don't realise they could have claimed...

Insurance in Super is a mess and a farce. One of my sons is on a Disability Pension due to Muscular Dystrophy. If we hadn't followed up with his Super Fund (retail) his insurance could have been cancelled due to inactivity since not being able to work. This was a mess. The farce is the fact that there is no option for anyone who doesn't have dependents. If a member leaves his Insurance to parents, siblings even under a binding nomination the Trustee decides unless he has a Will and nominates LPR as his beneficiary. How many young people from 15 to 23 + have a Will? It's time AIA and TAL realised the Trustees of these funds are costing their Companies millions. Best to go with e.g. Real Life Insurance where the beneficiary cannot be disputed and tax free. My son left his Super and Death Benefit to his father and me, his mother. We , after 1 yr, received half of his Super and Death Benefit, and have now received a tax bill of $51,000 and in that 12 months paid out $109,000 on his Estate. Thanks REST. Even with higher premiums under Real Insurance u won't get a $51,000:tax bill so t would be worth doing the maths.

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