The fact is that most Australians can obtain life or disability cover at significantly lower cost through their Super Fund than elsewere, you normally don’t have to be underwritten and there’s a mechanism for the cost to be deducted straight from your super account. It adds up to a strong proposition. And then there are the claim rates – industry-wide, 80 cents of every dollar of premium paid is going back to the fund’s membership as approved claims.” Ultimately, some of the Cooper panel’s initial reservations about insurance through superannuation is reflected in its outline of the insurance “issue”, at the start of the chapter dedicated to the subject in its Final Report. “Insurance cover comes at the cost of foregone retirement savings and earnings. It is a trade-off that has a significant impact on the financial well-being of members,” the Final Report states. “Most members do not specifically consider their insurance needs.
The information trustees disclose to members about insurance is not always useful, making it difficult for members to compare insurance options and costs across funds.” Some stakeholders were fearful the Review might end up recommending that income protection insurance, or perhaps even any form of insurance, be offered via superannuation at all. However, the Review ended up enshrining the place of death, TPD and income protection insurance in super. The recommendations it made, such as that trustees develop an insurance management strategy, and that commissions not be paid on group cover, were already being followed by most funds, Boldeman pointed out. With the place of insurance in superannuation now recognised and secure, Boldeman pointed to a number of factors he believed would shape group insurance for the better in the decade ahead. He said the expected consolidation of superannuation funds would drive many of the efficiencies.