There have been some major changes to the way insurance is provided inside superannuation. Both sets of legislation outlined below aim to protect members’ superannuation account balances by restricting when insurance can be provided on member accounts. The new legislation aims to ensure members are not paying for insurance cover they may have forgotten about, and don’t need, and that premiums don’t inappropriately erode their retirement savings.
Additional laws passed in October 2019 introduced the Putting Members’ Interests First (PMIF) rules which place further restrictions around the way insurance can be provided to superannuation fund members. On and from 1 April 2020 super funds cannot provide automatic default insurance cover to any members with balances less than $6,000 (and whose balance has never been $6,000 or more on or after 1 November 2019) or to new members under the age of 25 unless an exception (such as the 'dangerous occupations exception' or ‘employer-sponsor contribution exception’ applies) or the fund receives an election from the member to maintain their insurance cover.
The dangerous occupation exception can only apply if the fund trustee makes an election to apply it to a member's dangerous occupation and informs the regulator (the Australian Prudential Regulation Authority). Hostplus has decided not to elect to apply a dangerous occupation exception.
The employer-sponsor contribution exception can only apply where an employer has notified the super fund in writing that they will fund the full cost of the insurance cover for their employees.
Existing members who lost cover on 1 April 2020 will have the ability to opt back in to default cover through the insurance section of their Member Online account from 6th April 2020 if they have not previously cancelled or opted out of default cover.
New members (including members under 25 or with an account balance below $6,000) can elect to receive default cover at any time or apply for cover at any stage during their membership.
In March 2019 the Federal Government passed the Protecting Your Super (PYS) legislation which requires super funds to remove insurance from accounts considered to be ‘inactive’ for 16 continuous months, unless the fund receives specific instructions from the account holder to maintain their insurance cover. Under the PYS legislation, an account is considered inactive if it has not received an amount (such as a contribution or rollover).
If a member is at risk of losing insurance on their account because it has been inactive for 16 continuous months, Hostplus will give the member a notice explaining when insurance may cease if the account remains inactive. These notices will be provided 7, 4 and 1 month prior to the date on which Hostplus may be required to remove insurance from the member's account under the PYS legislation.
Hostplus members may receive default Death and Total Permanent & Disability Insurance upon joining the fund subject to terms and conditions and meeting PMIF eligibility requirements as stated above. Some members may also receive default Salary Continuance insurance*.
You can refer to the Hostplus Product Disclosure Statement (PDS) or visit hostplus.com.au/insurance for more information about the insurance options available through Hostplus, and the relevant terms and conditions.
Death and Total & Permanent Disability Insurance is designed to protect you and your loved ones in case of the unexpected. Benefits from these insurance policies can be used to pay your mortgage or any other debts such as child care, education and living expenses, in the event that you are unable to work permanently, or are no longer around.
Salary Continuance cover is designed to protect your income in case you are unable to work due to temporary illness or injury. Benefits from this insurance can provide regular monthly payments to help you meet your ongoing expenses while you recover.
Benefits of insurance through Hostplus include:
Visit hostplus.com.au/insurance for a range of tools and calculators that may help you calculate the level of cover you require. You may wish to seek independent financial advice before you make a decision about your insurance through Hostplus.
Further information about insurance in superannuation is also available on ASIC's MoneySmart website moneysmart.gov.au
*Insurance provided through Hostplus is issued by MetLife Insurance Limited, ABN 75 004 274 882, AFSL 238096 (MetLife) to Host-Plus Pty Limited (the trustee for the Hostplus Superannuation Fund (Hostplus)). Cover is subject to terms and conditions and eligibility criteria. Some occupations are excluded from cover and some members may not be provided with cover or may be provided with different types and levels of default cover depending on their circumstances.
Hostplus superannuation is issued by Host-Plus Pty Limited ABN 79 008 634 704, AFSL 244392 as trustee for the Hostplus Superannuation Fund ABN 68 657 495 890, MySuper No 68 657 495 890 198 (the Fund).
The information is general advice only and does not take into account your personal objectives, financial situation or needs. Therefore you should consider if this advice is appropriate for you in light of your circumstances before acting on it. Please read the relevant Hostplus Product Disclosure Statement (PDS), available at www.hostplus.com.au before making a decision about whether to acquire or continue to hold Hostplus superannuation.