WA Super News
Insurance changes – Your questions answered
We have had many member enquiries about the insurance changes that came into effect from 1 July 2017, so hopefully this overview of the changes will assist you in understanding what has happened and how it might impact you.
What has happened?
On 1 July 2017 we changed our Death and Total & Permanent Disablement (TPD) and Income Protection (IP) insurance cover design. This involved changing the age based insurance cover for death and TPD and the premium rates.
This is the first insurance rate review WA Super has had in 8 years (2009 was the last time our insurance rates changed). Over this period the cost of insurance has increased across the industry and many other super funds have had at least one rate increase with many having two over the same period.
Why the change?
Super funds partner with external insurers to provide insurance services to their members. At WA Super, we have a contract with TAL Life Ltd. With our previous insurance contract expiring in 2017, WA Super tendered out to the insurance market in 2016 in order to select the best insurance product and service offering that suited our membership profile.
We wanted to ensure that our default (also known as Basic) insurance design was not only affordable and sustainable, but reflected our member’s needs and most importantly still allowed flexibility for you to tailor insurance cover to suit your needs.
How do the changes impact you?
The next section will explain the insurance cover available to you through your WA Super membership, what might have changed for you on 1 July 2017 and what options you may have.
Death & Total and Permanent Disablement (D&TPD)
What is Death & TPD Cover?
Death cover pays a lump sum to you or your nominated beneficiary/s if you die or suffer a Terminal Illness where death is likely to occur within 12 months. Death cover can provide financial security to your beneficiary in a time of uncertainty and can help cover financial expenses.
TPD cover provides you with a lump sum payment if you’re totally and permanently disabled and are unable to work again. For a full definition of TPD see page 19 of our Insurance Guide found here.
Changes to Death & TPD cover from 1 July 2017
If you had Death &TPD insurance prior to 1 July 2017 then you may have held one or more of the following insurance cover designs:
1. Basic Cover
When you joined (and if you were eligible) you would have been offered our default cover which is called Basic Cover. This is automatic cover (that is, you did not need to provide medical evidence) and the amount of cover was age based. From 1 July 2017, the amount of cover and cost will vary with age. If you have Default cover and would like to increase the amount you are covered for, you can apply for Fixed Cover by completing an Insurance application or variation form available here.
You can also increase your cover without needing to provide medical evidence on the following occasions:
- Life Events Cover increase; or
- Annual Cover increase (Available 1 June to 31 July each year)
Please refer to page 4 of the Insurance Guide for more information, available here.
2. Basic Unitised Cover
When you joined WA Super (and if you were eligible to choose cover) you may have chosen unitised Basic cover. The amount of cover was age based and premiums were a flat rate per annum. From 1 July 2017 this cover was converted to a fixed level of cover and rounded up to the nearest $1,000.
3. Standard or Top Cover
When you joined WA Super (and if you were eligible to choose cover) you may have chosen to opt for Standard or Top Cover. This type of insurance cover is calculated each year on 1 July or when you advise us of a change in your salary using a prescribed formula and for this reason it varies each year.
The formula is:
For Standard Cover: 15% x Annual Packaged Salary x years to age 65
For Top Cover: 20% x Annual Packaged Salary x years to age 65.
The cost of this cover is based on your benefit amount, age, gender and occupation. Standard and Top Cover may be retained by existing members however the option to transfer to this type of cover is no longer available.
4. Other types of Cover
On 1 July 2017, if you held a combination of Fixed Cover and any other type of cover (Basic, Basic Unitised, Standard and Top) your insurance cover was converted to a Fixed Cover amount based on the insured benefit you held at 30 June 2017.
If you fall into this category the insured amount of Death and TPD will become fixed at the amount you specify until age 65 when your cover and premiums will revert back to Basic Cover until it is cancelled when you reach the age of 70. The cost of this cover is based on your sum insured, age, occupation and gender.
You can refer to the Insurance Newsletter which we sent to all members here.
New Members joining WA Super
If you are a new member joining WA Super (and you are eligible) you will receive Basic Insurance cover automatically. However, you have the option to increase your Death & TPD insurance cover up to a maximum of $700,000 without the need to provide medical evidence. To do this you will need to complete an insurance application or variation form and this must be received by us within six months of your cover commencing. Your insurance cover will become fixed at the amount you specify until age 65 when your cover and premiums will revert back to Basic Cover until it is cancelled when you reach the age of 70.
Income Protection Cover
What is Income Protection?
Income Protection (IP) insurance provides you with a monthly income if you are unable to work due to illness, injury or accident. A Partial Disability benefit may also be payable to you if you can work in a reduced capacity.
Changes to your IP cover from 1 July 2017
If you had default IP cover prior to 1 July 2017, then you may have been automatically covered for 50% of your Package Salary up to a maximum of $9,000 monthly sum insured for a fixed weekly rate regardless of your age. For default IP cover the waiting period has not changed and is 90 days with a benefit payment period of 2 years.
From 1 July 2017, your IP cover is now 85% of your Cash Salary and the premium is age based. For many members this change resulted in a substantial increase in the level of sum insured and potentially a substantial increase in premium.
What options do I have?
There are several options available to you if you want to tailor your IP cover.
You can change the benefit period to 5 years or to age 65. You can also amend the waiting period to 30 days and up to 2 years.
If you already had IP cover before 1 July 2017, you can also reduce your sum insured down to a maximum amount of $3,000 per month.
To find out more please refer to the Insurance Guide found here.
New Members joining WA Super
New members who are eligible who have joined WA Super since 1 July 2017 will receive the default level of IP cover, called Basic Cover, which has a maximum benefit of $3,000 per month, a 2 year benefit period with a 90 day waiting period. You can tailor your IP cover to suit your needs and there are several options available, to find out what they are please contact us on (08) 9480 3500.