MLC Life Insurance has welcomed the Government’s announcement of a Treasury review into the operation of the Your Future, Your Super Laws and is strongly encouraging Treasury to look at the impact of stapling on vulnerable people, especially women.
A statement from the insurer says that while positive in its intent to reduce the number of Australians with multiple superannuation accounts, “…in practice the reform means that members are required to be aware of the rules and take greater responsibility for decision making and therefore the consequences of their decisions will be much greater.”
The insurer quotes its own research in which it reports a “massive” 60% of superannuation fund members have never heard of stapling, potentially leaving them with inadequate or no life insurance protection when they change jobs.
It notes that the impact of stapling will “…disproportionately impact vulnerable people, mostly women, who will have their life insurance cover ‘switched off’ if they are out of the workforce for more than 16 months (resulting from Protecting Your Super reforms).
“When they try to re-join the workforce, because of stapling, they must make proactive steps to obtain cover again and, in some cases, they will not have access to the cover they once had. Many are unaware of the issue and vulnerable people are far less likely to have access to financial advice.”
…the research shows that women are less engaged than men with their insurance…
MLC Life Insurance says the research shows that women are less engaged than men with their insurance – 37% of women say they are engaged with their insurance, nearly 10% lower than men (46%).
Mark Puli, Chief Group Insurance Officer, MLC Life Insurance, says while the overall system of group insurance is delivering for Australians, reforms such as stapling need greater consideration for vulnerable people.
“The review of Your Future, Your Super is a positive development on many fronts, but the terms of the review must include insurance coverage,” he says.
“More than 70% of Australians hold life insurance inside superannuation. In 2021 alone, 45,000 claims worth $3.7 billion were admitted for life and TPD, providing cover for members or their beneficiaries when they needed it. The overwhelming majority of Australians value this cover.”
…only 42% of members have ever reviewed their insurance…
He notes however that as it moves to a member-led, rather than employer-led system, “…the most vulnerable Australians will slip through the cracks. Our research shows that engagement remains an issue, and only 42% of members have ever reviewed their insurance.”