Insurance within superannuation should be mandatory over the age of 25, law firm Maurice Blackburn says in a submission to a life industry inquiry.

“We already know Australia has a significant underinsurance problem and any move to

‘opt in’ would exacerbate this problem with direct budget consequences,” it told the Parliamentary Joint Committee on Corporations and Financial Services.

“The debate should be on how to close the current gap rather than make the situation worse.”

Maurice Blackburn says a report by actuary Rice Warner shows ending group life cover would mean a bill to the taxpayer of $400 million a year.

“Any move to ‘opt in’ would effectively dismantle this existing safety net, punishing working people and pushing the cost burden on to the taxpayer. The committee’s time would be best spent on the regulatory and legislative structure that creates standards that improve the behaviour of insurers.

“We believe there is merit in the committee considering a renewed and strengthened package of insurance for working Australians… mandated through the MySuper structures.”

Maurice Blackburn proposes that the only workers who could opt out of group life cover would be under-25s or those with cover in retail products.

The firm also wants a mandatory minimum level of cover within super, and says group life should be consistent with the Superannuation Industry (Supervision) Act definition for permanent incapacity.

“Insurers would still be free to market different types of life insurance, but they would have to clearly explain to individual customers deviations from the standard cover without burying non-standard terms in the fine print. Working Australians will be able to easily compare their policy online to understand their own policy relative to other like policies.”