Financial planners have been taking advantage of the generosity of industry superannuation fund group insurance arrangements to assist clients some of who would be unlikely to be approved for life/risk cover outside of super, according to Australian Institute of Superannuation Trustees (AIST) chief executive, Tom Garcia.
Participating in a roundtable run by Money Management’s sister publication, Super Review, Garcia said such practices were a reflection of the ferocity of the group insurance arrangements entered into between major super funds and insurers but that the corollary was problematic claims experiences.
He said planners had succeeded in identifying the opportunity and had taken advantage of it.
Former Superannuation Complaints Tribunal (SCT) chairperson, Jocelyn Furlan, said she was concerned that some elements of the group insurance sector had become broken, particularly with respect to total and permanent disability (TPD) insurance.
Furlan said she believed a real problem existed when the system was conspiring to encourage people to remain sick.
The roundtable panel agreed that more needed to be done to better align insurance product design to the needs of members.
