Super life insurance reforms sensible step in providing choice for consumers
24 July 2017
Superannuation reforms announced by the Federal Government to improve the process for consumers regarding opt-out default life insurance are a sensible step in protecting a critical safety net whilst also providing greater choice, Maurice Blackburn Lawyers said today.
Maurice Blackburn Principal Kim Shaw said the reforms announced today recognised the vital role of default insurance through super in helping to close the insurance gap in Australia, whilst also ensuring consumers can have a greater say on their default life insurance options.
“Australia has a significant under-insurance problem, and default life insurance cover provided through superannuation funds is a critical measure in helping to address this gap for thousands of consumers who would otherwise have no life insurance cover at all,” Ms Shaw said.
“Today’s reforms however recognise that a simpler process is needed for when people wish to make changes to their default insurance cover, something we support in preserving default insurance as a vital safety net whilst also providing choice.
“Education for consumers around these measures, and the necessity of life insurance more broadly however is needed in our view, particularly in helping to guide people who may be seeking to consolidate their super and default life insurance.
“Consumers are often encouraged that consolidation of their super accounts is automatically the best way forward when that may not always be the case, as in many instances consolidation of super can erode balances and benefits and risks leaving consumers worse off.
“Greater education is also important in ensuring young people are properly informed about their super and life insurance options.
“Today’s changes will obviously benefit to young people with multiple employers and super funds, but like all demographics young people are not immune to being seriously and permanently injured and many young people have dependents. It is critical that all consumers are informed about the value of insurance cover in the event of illness or injury,” she said.
Ms Shaw also again urged the Federal Government to act on introducing a scheme of last resort for victims of financial wrongdoing.
“We note Minister O’Dwyer’s comments today that the government is set to soon receive recommendations with respect to the implementation of a scheme of last resort,” Ms Shaw said.
“In our view such a scheme is badly needed to better protect victims of poor financial advice, and we would urge the Federal Government to act on this as a priority in its efforts to take a tougher approach towards reforming the banking and financial services industry.”