Changes to life insurance cover under Putting Members’ Interests First reforms
REI Super offers members affordable insurance cover for death, total and permanent disablement (TPD) and income protection, and new legislation from 1 April 2020 will affect cover for some members.
In September 2019 the Federal Government passed legislation to support the “Putting Members’ Interests First” reforms. These reforms come into effect on 1 April 2020 and aim to ensure that members’ superannuation balances are not unnecessarily eroded by insurance premiums by requiring superannuation trustees to only provide insurance on an “opt-in” basis.
Members whose super balance has not reached $6,000 or more from on or after 1 November 2019 will have their insurance cover turned off at 1 April 2020, unless they elect to keep the cover.
Impacted members will receive a letter from REI Super advising that the fund is obliged to ‘turn off’ insurance. Instructions on how to keep insurance will also be provided.
New members under age 25 will not be provided with insurance cover unless they elect in writing to have cover.
REI Super work with group life insurer MetLife to negotiate insurance premiums for members. Insurance premiums are deducted from member accounts, so payments are hassle-free.
There are also risks involved in having insurance through superannuation. Costs of insurance premiums are deducted from member accounts, reducing the money available at retirement. TPD insurance cover is subject to a work test, which a member must satisfy to be eligible for cover. Having multiple super accounts not only means paying multiple sets of fees, further eroding super balance at retirement, but may also impact insurance cover.
Individual insurance requirements are dictated by personal and financial circumstances, which will change as life changes. Milestones such as children and mortgages can have a significant impact on insurance requirements.
MetLife Insurance offers an online insurance needs calculator that helps match insurance cover with a member’s personal requirements.
For more information the impact of the Putting Members’ Interests First reforms, see the Significant Event Notice sent to all members on 1 December 2019.
As premiums are paid from your superannuation savings, your superannuation balance will reduce by the premium paid each year. Insurance provided by MetLife Insurance Limited ABN 75 004 274 882 AFSL 238096.
The information contained in this article does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super before making any decisions. REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129 February 2020