Over the last few days, we’ve read about what the 2018 Federal Budget will mean for all types of Aussies.
But there are now fears that life insurance policies in superannuation will have their premiums jump by 30%, due to the new laws proposed by the government.
Super funds will now be forced to end automatic life insurance cover for new members under 25, encouraging members instead to opt-in to recieve cover.
Super accounts that have not had any contributions for 13 months will now also have their cover scrapped, while cover for members with less than $6,000 in their accounts will become optional.
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According to KPMG superannuation partner, Adam Gee, the proposed changes for life insurance in super could hike the price of premiums due to the mass reduction of younger members.
“As superannuation insurance is a provided via a ‘group’ pooling arrangement, the removal of younger lives can only increase the overall risk of the whole insurance pool,” he told the Australian.
“This removal is likely to result in an increase in insurance premiums for the remaining members, which is a surely not the intended outcome.”
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Looking to the future
The move is also expected to shave $3 billion off in premiums the life insurance industry currently receives and is equivalent to a 35% reduction in revenue gained through super accounts.
Despite the fact that life insurer, TAL is expected to experience a financial blow thanks to new measures, its Chief Executive, Brett Clark has still thrown his support behind the changes, but does believe that careful consideration is still required before their implementation to guarantee that Aussies are covered adequately.
“For blue-collar and higher risk occupations it is important that Australians have the appropriate level of insurance,” he explained.
“The current budget proposal could lead to some younger Australians who need insurance not being adequately protected.”
But since the new Federal Budget laws won’t come into effect until July next year, Aussies still have time to think about their life insurance options.
Get on top of your life insurance by reading our pro and con list for super and standalone policies before checking out the lastest deals using our life insurance comparison tool.