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Superannuation Changes Shrink Insurance Coverage by Over a Third

Superannuation Changes Shrink Insurance Coverage by Over a Third

Superannuation Changes Shrink Insurance Coverage by Over a Third?w=400
Recent findings uncover the significant consequences that successive government reforms, most notably the Coalition's initiatives aimed at fortifying superannuation, have had on Australians' insurance policies held within superannuation funds.

The investigation, conducted by the Association of Superannuation Funds of Australia (ASFA), has brought to light a startling 36% decrease in the number of individuals covered by life insurance within super funds for death benefits, along with a comparable decline in Total and Permanent Disablement (TPD) coverage.

ASFA CEO, Mary Delahunty, unveiled these findings ahead of a Sydney conference, emphasizing a worrying trend that smaller numbers of Australians now benefit from the safety net of group insurance tied to superannuation, leaving families potentially vulnerable.

The disruption is not just felt at the individual level but echoes across the economy. ASFA's research indicates the legislative reforms have resulted in approximately 5,000 death benefit claimants missing out on collective payouts amounting to A$655 million for the 2022-23 period alone.

The dive in insured lives aligns precisely with forecasts modelled by ASFA at the time these legislative adjustments took place, predicting that around 5 million policyholders could be affected.

Published:Wednesday, 28th Feb 2024
Source: Paige Estritori

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Surrender Value:
The amount of money an insurance policyholder will receive if they voluntarily terminate the policy before it matures.