On Feb 18 this year, for the second time in 12 months, Australian Super Fund announced rises in premiums for insurance. The latest rates came into effect from 29th March 2014 and predictably applied to the “big three” of life insurance, TPD (Total and Permanent Disability) and income protection.
In a letter to its members it started flatly that the cost of insurance in Australia continues to rise resulting in a need for it to increase premiums. Its management linked the rises to:
In the same letter to members it also advised that going forward it would now be reviewing its insurance rates annually rather than every three years as it had done previously. Addressing what would then have been front and centre in every members mind, it then stated that this would not necessarily mean automatic annual premium increases. But was designed to offer members stability who had hitherto experienced significant increases / and or decreases in their costs. Hmm…
I think for a percentage of people it seems a natural and logical state of affairs to have their insurance needs met by the Super Fund of which they are a member, keeping it all “in house” so to speak.
In the past to a large degree it made sense as many super fund members enjoyed relatively cheap insurance. Unfortunately these days you could be doing your hip pocket a good deal of harm by following this policy. Especially if said Super Fund has had a premium rise in the order of 35%, ala Australian Super’s.
Looking around the super funds in general it seems that the key age groups to be affected will be those aged 25 to 59. On average a good deal of super fund members will see their basic death cover costs double.
These days it’s much healthier to objectively see your super fund as just another player in a large and competitive market.
If you’ve become disillusioned with your super fund and their approach to keeping your insurance business then maybe it’s time to give one of our Rate Detective expert insurance consultants a call. We have access to 12 retail insurance companies and the good news is that many of these retail companies allow payment out of your superannuation. We then match your requirements across a broad panel of insurance providers. At the time of writing this article, the following insurance companies products can all be paid for by your Australia Super.