The new rules mean
- for some super fund members, their insurance cover will be switched off on 1 April 2020 unless they make a choice to keep it
- the new rules will force Super funds to cancel insurance cover for members with account balances of less than $6,000, unless you contact them in writing that you wish to keep your insurance cover.
Who is affected by the changes?
For people already with super fund provided life insurance
- Existing super fund members with account balances below $6,000 as at 1 November 2019 must tell their super fund by 31 March 2020 if they want to keep their cover or they may have their insurance cancelled.
For people joining a super fund and expecting automatic levels of life insurance to be available
- New super fund members joining from 1 April 2020 need to be aged 25 or over, and have an account balance of $6,000 or more, for insurance to be automatically provided. Members who are under 25 must opt-in manually.
What do you have to do?
- If you’re under 25 and have automatic insurance provided to you by your super funds and you want to keep it, (you’ll need to tell your super fund through their app or through a phone call).
What does this mean for parents with adult children?
Life insurance is designed to provide your loved ones with a backup plan in case you unexpectedly pass away or it can be converted to cash for you if you become terminally ill.
Either way, many Australians have little to no backup available to them - and this includes those under 25 who may have partners, young families or even be the financial backup to aging parents.
These new rules for people under 25 with low super fund balances will only add to the risks parents and young people have top learn too proactively manage, otherwise what was designed to Put Members Interests First could inadvertently strip away the only insurance support they ever had.