Home / Life Insurance / Donít cancel super insurance during crisis: law firm
23 March 2020
A government plan to automatically cancel some superannuation insurance next month should be put on ice given the uncertainty over the COVID-19 pandemic, law firm Slater and Gordon says.
From April 1 insurance held by some Australians through their super accounts will be cancelled if they do not opt in to be covered for death, total and permanent disability (TPD) and income protection cover.
Default insurance is due to be cancelled automatically for Australians aged under 25, those with less than $6000 in their fund or an account that has been inactive for 16 months or more.
Slater and Gordon lawyer Annemarie Gambera says the Federal Government should not be automatically removing insurance from potentially vulnerable people during COVID-19 uncertainty.
“Many people under 25 are studying or working in casual roles in hospitality, retail and tourism, and may need to access income protection or make a workers’ compensation claim if they find themselves out of work for weeks at a time if they contract the virus,” Ms Gambera said.
She wants the reform delayed until after the COVID-19 threat has passed so families don’t miss out on insurance if a loved one dies after contracting the virus.
“When people are facing financial uncertainty or the potential of being ill, they need to ensure they have access to these benefits in case they lose the ability to work,” Ms Gambera said.
The most vulnerable, including people with existing health conditions, single mothers and migrant workers with low balances, may find themselves without the cover they need in the event of a death, job loss or permanent injury from the virus.
The planned changes ensure super accounts with low balances are not eroded by insurance premiums and fees. Inactive accounts will roll over to the Australian Tax Office to be combined with active super accounts, avoiding multiple premiums.