Insurers and super funds must rethink their approach to insuring older members, according to Chant West Head of Research Ian Fryer.

“Very few funds think about the needs of their members when they reach the age of 50,” Mr Fryer told the AIA group insurance conference in Sydney last week. 

“In most funds, the cover drops off at the age of 50 but times are changing and people still need cover at that age.”

Chant West research shows the median white-collar default death cover in the top 30 industry funds is $95,000 aged 50, compared with $250,000 aged 30.

Mr Fryer says it is no longer unusual for members aged 50 to have a considerable mortgage and children at school.

Members can request extra cover, subject to actuarial assessment. The median of this death cover at 50 is $165,000, compared with $440,000 at the age of 30, the research shows.

“The issue is the structure of the premiums,” Mr Fryer said. “Funds should offer the ability to increase insurance cover when [an older] member’s life changes.”

Some industry super funds offer this but cover is increased by only small amounts.

“Almost all retail master trusts offer this option, which we think is excellent,” Mr Fryer said.

“Funds should offer members the ability to increase cover when their lives change, without health evidence.”

Mr Fryer says funds and insurers need to look at levels of default cover for over-50s, to avoid dropping their insurance completely.

REST Industry Super CEO Damian Hill says inadequate cover for over-50s is a key issue.

“While contribution levels have risen from this group, levels of insurance haven’t increased,” he said. “Over-50s do currently pay for the risks but as they are usually on a higher salary they can afford to pay the increased premiums.”