Aon Australia has criticised the new choice of superannuation regime – to be introduced on July 1 – because many workers could fall between the cracks without adequate life or disability insurance.

Aon People Risk Solutions Practice Leader Tim Dwyer says when workers change their superannuation fund the insurance cover from the old fund will cease.

“But the worker may not be covered by the new fund, particularly if the fund waits until regular contributions are received or until a medical check has been completed,” Mr Dwyer said.

The results of a medical check may render a worker uninsurable – a fact which could further magnify the problems around choice.

Mr Dwyer says people can also be caught short if they do nothing about their super. “If a person does not choose a superannuation fund as part of choice, they will be placed in a default fund,” he said.

“Default funds do not have to include disability cover and they will only be required to provide a minimum level of life insurance. The default fund could also be a retirement savings account – in which case it doesn’t have to provide any insurance cover.

“We are likely to see the emergence of a ‘top-up’ market to supplement default levels of cover and the re-emergence of employer-sponsored insurance benefits,” he said.

“We expect financial planners to have an increased advisory role. We also predict a new and growing need for insurance advisory services to workers who cannot afford the services of a financial planner.”