Important changes affecting Insurance
What are these changes?
There has been an increased focus on insurance through super over the last 12 months due to superannuation law changes made by the Federal Government. These changes are important as they have been put in place to prevent the erosion of super account balances of members who are paying insurance premiums for cover, they don’t need or want.
The changes mainly relate to members who have Basic insurance cover. The three key changes are:
1. Inactive member accounts with insurance
If you have insurance, but you haven’t added money to your super account for 16 consecutive months (in other words you are an inactive member) you could lose your insurance cover from 1 July 2019, unless you elect to opt-in.
There are three simple options to retain your insurance if you ever become Inactive:
- opt-in to your insurance cover by completing an online insurance confirmation form,
- if you have already been notified by us via letter or email, you can return the form that was sent to you; or
- reactivate your account by:
If you ever become impacted by these changes, we will write to you to outline your options and provide you the date when your insurance will be cancelled if you choose to do nothing.
2. Low balance accounts with Basic Insurance cover
Basic insurance cover was automatically cancelled on 1 April 2020 for any super account which had a balance of less than $6,000, unless the member has requested to keep it.
3. New members joining from 1 April 2020
New members joining from 1 April 2020 will no longer automatically receive Basic insurance cover when their WA Super account is opened. Instead, Basic Insurance cover will only be provided if the member:
- opts into Basic insurance cover; or
- is 25 years (or older) and their account balance is $6,000 (or greater).
Let’s look at how this will work and how members are impacted from 1 April 2020:
Kate joined her new employer on 1 April 2020. Kate decided to open an account with WA Super, her employer’s default super fund, as she had heard good reports on the fund’s fees, performance and service. Kate is 26 years old.
Kate’s account is established without Death, TPD or Income Protection insurance as her account balance is below $6,000 and she has not opted in to have Basic cover. Over the next two years her account balance gradually increases and reaches $6,000. As Kate has not previously held insurance cover with WA Super, is over 25 years of age and her account balance is now over $6,000, she will be able to have Basic insurance cover setup on her account.
WA Super automatically applies Basic insurance, called Basic Cover, and writes to Kate to inform her of the new insurance cover and premiums. As Kate is receiving employer contributions into her account, limited cover conditions* only apply to her insurance cover for the first 120 days (commencing when her insurance was applied). If Kate was not receiving these contributions, limited cover conditions* would apply for 12 months.
After receiving this notification, Kate can choose to cancel or reduce her Basic insurance cover or apply for additional cover under WA Super’s automatic acceptance limits.
* Limited Cover Conditions means for claims arising from an illness or injury that first became apparent prior to your cover commencing, you will not be covered for the Limited cover period.
Annual insurance premium reviews to align with member birthdays
WA Super has historically recalculated insurance premiums for Death, Total and Permanent Disablement (TPD) and Income Protection insurance cover on 1 July each year. Your insurance premiums may also be recalculated when you make changes to your details that can impact your insurance (e.g. annual salary, occupation risk rating) or if there are changes to the underlying insurance rates as set by our insurer. The insurance rates set by our insurer are used to calculate your annual insurance premiums, which are then deducted monthly in arrears from your super account. Insurance premiums are determined by your age and will generally increase as you get older.
As outlined in our February 2020 newsletter article, from 1 July 2020 WA Super has changed the insurance rates recalculation date from 1 July each year to the member’s birthday to make it more equitable for all members.
How will this work?
When you have your next birthday, we will write to you, on or shortly after, to inform you of your new insurance premiums and any changes to your cover (if applicable). At this time, we will also request that you update your salary and occupation level details should the information differ to what we have on record. This will give you an opportunity to review your insurance cover and decide whether the cover you have is still suited to your needs.
We understand you may have questions on this insurance change or you may need our help, if so please contact us on (08) 9480 3500.
Insurance in Superannuation Voluntary Code of Practice
WA Super has partially implemented the Insurance in Superannuation Voluntary Code of Practice following its commencement on 1 July 2018. The overarching objective of the Code is to improve the insurance in superannuation offered to you and the processes by which we provide insurance benefits to you. WA Super has put on hold any further changes relating to the Code pending the completion of our merger with Aware Super. To view Aware Super’s implementation plan, please visit their website https://aware.com.au/member/superannuation-and-insurance/superannuation-insurance.