Super funds need to work harder to inform their members about insurance inside superannuation, but there are benefits for the funds and members if they do.
Research by MetLife research, contained in its Insurance Inside Super Report 2019, has found that super fund members “lack awareness” about insurance in super. 73% were aware they could have life insurance in superannuation, but half didn’t know what kind of insurance cover they had in super.
39% of people are aware they have insurance cover in super, but don’t know that they can modify it. 28% were not aware they are changed insurance premiums for cover inside super.
27% became aware they have insurance in super after communication from their super fund, but for 14% it was when they noticed insurance premiums being deducted from their account.
“This discovery can lead to members cancelling cover if they don’t understand its value and benefits,” said MetLife, in the report.
“To avoid rude shocks, more needs to be done to inform members about insurance inside super and the benefits of this type of cover.”
72% trust their super fund to help them make decisions about life insurance, and 70% trust their fund to help them with how much life insurance they need.
For funds that help clients with their insurance there may be “significant benefits”, both for members and the fund.
Super fund members who have changed their insurance in super – in particularly increasing it – are also more likely to be engaged with their super, and be loyal to their super fund, the research found.
“The research reinforced that there is still a long way to go to support women to improve their engagement with insurance inside super and their super,” said MetLife.
The research found that 19% of women are aware they have insurance in super and have modified it, compared to 25% of men. Women were also less likely to be aware they could change their insurance cover – 57% of women compared to 63% of men – and less likely to be aware they were being charged an insurance premium – 66% of women compared to 76% of men.
“Effective communications between super funds and their members is vital to driving awareness and behaviour change when it comes to insurance inside super.”
The research found that member want more frequent communication from their super fund about insurance – with 52% wanting communication at least every six months, and 85% at least annually.
The language used is also important, with focus groups conducted by MetLife finding participants – particularly those under age 30 – “were confused by terminology such as ‘premiums’, ‘pre-tax’ or ‘default’”.