Super Consumers Australia has renewed calls for an inquiry into life insurance policies held via superannuation accounts, urging the Federal Government to act on Productivity Commission proposals.

The consumer advocate says a review would be an important step towards determining if insurance in super is the best way for Australians to get quality, good value cover.

The Productivity Commission in its 2019 report on the efficiency and competitiveness of the Australian superannuation system recommended an independent public inquiry into insurance in superannuation within four years from the completion of its findings.

According to the commission, not all members get value out of insurance in super but the Government has yet to respond to the report.

While the Government has implemented a number of changes, such as the “stapling” measure to prevent workers holding multiple super accounts, there are still gaps in the system that leaves workers vulnerable, Super Consumers Australia said.

“This year a number of reforms have been introduced that make the super system much fairer and easier for people to navigate, including stapling where people will take their fund with them from job to job,” Director Xavier O’Halloran told insuranceNEWS.com.au.

“These are positive steps, but they don’t tackle issues around the efficiency and equity of insurance.”

He says some superannuation members are still being automatically charged for insurance that might be inappropriate if they become unemployed or work in a hazardous job.

“Some may be stapled to a fund where the insurance product is inappropriate for a new job,” Mr O’Halloran said.

“Others may be denied cover under a fund they are defaulted into because of their occupation.”

He says super-linked life policies are also often overwhelmingly complex and many people don’t have the time or resources to fully understand them.

More could be done to “universalise” basic protection, especially in default cover to make sure people aren’t falling through the cracks, Mr O’Halloran said.

He says there are also a series of overlapping protections in the wider safety net system which need to be harmonised.

“Insurance inside and outside of super, the Disability Support Pension and workers’ compensation schemes could be better aligned to ensure people are appropriately protected,” Mr O’Halloran said.

“It’s time for the government to review insurance in super to make sure people get adequate support if they lose their income due to disability or death.

“This is one of the few remaining recommendations from the Productivity Commission’s review into super.”