UNFAIR TERMS

In its recent submission to a parliamentary inquiry into the life insurance industry, Choice says there’s no reason why an insurer should be able to deny a claim based on a member’s super account balance when premiums are paid up.

It quotes the case of a worker who took his own life and his family’s battle to get his $92,000 insurance payout. The claim was rejected on the basis that his account balance had fallen below $1200 and no contributions had been received for 62 days. This was despite the fund continuing to take out premiums until his death.

It also wants insurance to be better targeted. “Some types of insurance, such as TPD, may be appropriate for younger workers but further thought should be given to the appropriateness of defaulting younger people with no dependants and often parttime or casual work arrangements into death and income protection cover.

“Given the prevalence of multiple accounts and the possibility that these may not be consolidated for many years, there are potentially large portions of retirement balances which are being eroded due to poorly targeted and duplicate policies.”