Su­per funds pay $5bpa on claims

The Sunday Times - - BUSINESS WEEKLY -

SU­PER­AN­NU­A­TION funds are pay­ing out al­most $5 bil­lion a year to mem­bers for death, dis­abil­ity and in­come pro­tec­tion in­sur­ance claims.

Ac­cord­ing to re­search by the As­so­ci­a­tion of Su­per­an­nu­a­tion Funds of Aus­tralia, there were 72,400 suc­cess­ful in­sur­ance claims by fund mem­bers in the year to June 2016.

“Most death, dis­abil­ity and in­come pro­tec­tion in­sur­ance held by Aus­tralians was pro­vided through su­per­an­nu­a­tion and with­out it, many peo­ple would have no in­sur­ance pro­tec­tion at all,” ASFA re­search di­rec­tor Ross Clare said yes­ter­day. “Re­ceiv­ing an in­sur­ance pay­out is not a rare event.”

The aver­age worker had a 25 per cent chance of claim­ing against in­come pro­tec­tion in­sur­ance dur­ing a 40-year work life, he said.

About 5 per cent of fund mem­bers are likely to make a suc­cess­ful claim against their to­tal and per­ma­nent dis­abil­ity ben­e­fit and a fur­ther 5 per cent will have a life in­sur­ance ben­e­fit paid.

The re­port did not re­veal the num­bers or per­cent­age of un­suc­cess­ful claims or the cost to mem­bers of in­sur­ance pre­mi­ums.

How­ever, Mr Clare said group in­sur­ance through su­per funds was sub­stan­tially cheaper than buy­ing di­rectly through an in­sur­ance com­pany.

On aver­age, group in­sur­ance poli­cies pay out 80 per cent of pre­mi­ums to claimants, com­pared with 50 per cent by re­tail in­sur­ance poli­cies.

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