Recent work undertaken by claims services firm, AFRM Claims Advocacy (ACA), has revealed that as many as four in every five family groups are unaware their deceased loved ones held default life insurance cover in their superannuation fund.
This alarming statistic has emerged following ground-breaking work conducted by the firm in collaboration with two of Australia’s largest funeral associations.
An early trend-setter in the emerging field of independent claims advocacy services, ACA says it is the only claims expert firm to have been accepted as a member of both the National Funeral Directors Association and the Australian Funeral Directors Association.
AFRM Claims Advocacy CEO, Bruno Muraca, shared with Riskinfo recent research the firm conducted with the families it has assisted via these two funeral associations, where it found that around 80% were unaware that their loved one held default life insurance in their super fund.
Giving context to the significance of this finding, Muraca noted most families in the modern world who lose a loved one of working age move from two incomes to one or from one income to none overnight, placing a significant financial strain on what is already a very emotional time for them:
For some families the life insurance and super death benefit claim is the difference to being able to remain living in the family home rather than selling…
“For some families the life insurance and super death benefit claim is the difference to being able to remain living in the family home rather than selling,” stresses Muraca, referencing a situation which he emphasises places both a significant financial as well as emotional impact on the family.
…reduced level of regular health checks may be a contributory factor resulting in many more Australians failing to secure early detection of potentially fatal conditions
Muraca also shared an anecdotal observation around what he perceives to be an increasing incidence of earlier-age deaths post pandemic. He asserts hundreds of thousands of Australian consumers have fallen out of rhythm with what used to be their regular medical check-up cycle. Muraca says this reduced level of regular health checks may be a contributory factor resulting in many more Australians failing to secure early detection of potentially fatal conditions, thereby leading to what he suspects to be a spike in premature deaths from aggressive diseases/illnesses in recent years.
Either way, Muraca says the concerning level of ignorance apparent in such a significant volume of surviving family members about the existence of default life insurance cover held inside super offers an opportunity for advice businesses and firms such as AFRM Claims Advocacy to add immediate value and support for the beneficiaries of the deceased – in many cases ensuring the family better appreciates the true nature of their financial position, mostly on a more favourable footing than otherwise believed by the family to be the case.
My goodness me! Hold the phone! Things will never be the same, again
Great Scott! The things you find out when a person asks another person the appropriate question about their financial affairs.
It's all about relationships folks, and big industry funds don't have personal relationships with anyone.
This great Australian tradition, which all advisers know very well, Is that when something that looks important turns up in the snail mail, or even arrives via email, with some sort of obvious institutional identification, most Australians give it a quick glance and if it's a letter, leave it on the kitchen bench, for later on.
If it's an email communication it probably stays in the inbox ad nauseam, unless it's in the junk folder.
Most of Australia's superfunds seem to believethe that their members are standing around with baited breath, waiting for the next missive from that wonderful institution, their super fund. You know, the ones that spend a fortune on TV advertising to supposedly to bring in new members
Wrong! Talk to someone under 25 that is in a regular occupation and your will find that some are not aware they actually have super. Let alone life insurance in super.
But then of course there's always those who have some knowledge but, In reality, know really very little. Members have to read the tables in the insurance PDS (what's that) to discover that everyone's default life and TPD cover starts to automatically reduce around age 37. I've never met a client who knew about that sliding scale.
The Industryfunds are going to have to spend some money educating members. That's a lot of money to be spent, which means their fees might just have to increase.That's one of the reasons why they are not keen to have fully qualified advisers on call centres – it's just too expensive.
And even the "expert" members, who know a bit about their funds and their internal default insurance, are never informed, in any super fund insurance PDS, about the existencelump sum tax on TPD Insurance payments out of their super fund.
It's a wonderful world. And Mr Jones disqualified advisers will have absolutely no impact on the matter.
I could have informed ACA on that matter in a blink of an eye. And trousered the fees they paid for the survey
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