Superannuation fund information sheets on group life insurance often do not match the cover offered, an Australian Securities and Investments Commission (ASIC) report says.

“Members rely heavily on the trustee to distil the basic information for them in a simple way,” it says. “In our reviews, we found cases where disclosure was inconsistent and needs to be improved.”

The review found differences in fact sheets’ information on age conditions and premiums, and discrepancies in product disclosure statements.

One fact sheet featured discrepancies due to the policy being amended a number of times.

“In another case, the disclosure document did not clearly disclose the limitations and exclusions for the trustee’s death and total and permanent disability policy.

“We could not identify whether there were exclusions for injury caused by war outside Australia, or as a result of intentional self-inflicted injury or attempted suicide, which are common exclusions for these types of policies.”

ASIC says trustees must be clear to fund members about what is covered and the factors affecting claims. This is particularly relevant when dealing with mental illness claims, because some are refused on non-disclosure.

The regulator accepts it is not mandatory for group insurance policies between trustees and insurers to be made publicly available. But it says trustees should consider making policy documents available on their websites.

ASIC is also concerned about what happens when a member’s cover ceases.

“One insurance guide we reviewed stated insurance cover would be cancelled without warning because it was the member’s responsibility to maintain the minimum balance in their account to cover the premium,” the report said.

The regulator says it expects trustees to “tell members when cover is about to cease, in a way that allows them to take action if they want to. One example is notifying members before cover ceases, rather than relying on disclosure in the product disclosure statement they received when they joined the fund.”