The Hayne Royal Commission has unearthed its fair share of shocking behaviour by Australian financial institutions – not least the most recent revelations about some life insurers and their questionable practices. Particularly alarming is the information that has come to light on the poor track record of many direct, group, and superannuation insurance policies when it comes time for policy holders to make a claim.
As a firm, HLB Mann Judd believes that it is of utmost importance that our clients are aware of the insurance cover they hold, and the quality of the cover they rely on to protect them, and that they have the necessary detail to make an informed decision about their protection needs in the future.
We are undertaking a review of our clients’ insurance cover, using the skills and expertise of our in-house personal risk division, HLB Insurance Services. We believe ensuring our clients are properly protected is so important, this will be a complimentary service provided to the firm’s clients.
Ensuring the insurance you have is right for your circumstances is an area that needs expert advice, and there are particular concerns with the default insurance cover that is typically held inside superannuation:
- While these policies were once a cheaper option compared to retail (advised) insurance, we are finding that they are now mostly more expensive, often by as much as 25% or even 40%. Add to this some of the other uncertainties with this type of insurance, and the value of this option needs to be carefully assessed.
- The quality of the coverage provided inside superannuation funds is another area of concern. The wording of advised insurance policies is typically superior to direct, group, and superannuation insurance, and provides a more appropriate level of coverage.
For instance, provided all premiums are paid when due, advised insurance is guaranteed to renew until the policy expiration, regardless of any changes to the insured’s health, occupation or other personal circumstances. In addition, once an advised policy is in place, policy wording cannot be changed to the insured’s detriment. Not so with insurance through a superannuation fund. In fact, it is far too common to see trustees of some superannuation funds, particularly industry funds, signing off on amended policy wordings that result in significant detriment to policy holders, and often without their knowledge.
Advised insurance policies also allow for portability. Clients have the ability to move between superannuation funds, including to self managed super funds (SMSFs), without losing their insurance. In contrast, direct, group and superannuation insurance policies can be lost when a client chooses to roll their superannuation balance out of the fund.
Our clients’ existing policies will be reviewed using research software which analyses policy wording to accurately report on the quality of cover provided – quality in policy wording is essential to the value of the coverage a client has in place.
Get in touch for expert advice.
Andrew Kennedy – Risk Adviser
0410 346 545 | email@example.com