This is the last week for people with inactive super fund accounts to tell their funds that they wish to continue their insurance cover, several finance groups have warned.
Financial Counselling Australia, the Consumer Action Law Center, and the Australian Institute of Superannuation Trustees, have warned that on 1 July 2019 super funds will cancel insurance for members who haven’t had any super contributions in at least 16 months unless the member elects to continue the insurance cover.
This is the result of law changes made by the Government earlier in the year. The groups said they support the changes, which are designed to stop people from paying unnecessary insurance premiums.
The groups also warned that inactive accounts containing less than $6,000 would be transferred to the ATO – which will try to merge it into a fund with an active account.
“Not everyone needs to retain insurance. People who already have cover and/or are young, healthy and have no dependents are less likely to need life insurance,” said CEO of the Consumer Action Law Centre Gerard Brody.
“Insurance held through a super fund can be a cost-effective way to buy life insurance. You can choose to keep your cover if you want it – but you need to tell your fund before the end of June.”
But there are concerns the changes could leave people without cover.
Fiona Guthrie, CEO of Financial Counselling Australia, said the changes could “detrimentally impact people who could benefit from insurance in super, but haven’t read, understood or even received a notice about an inactive account and will therefore not make an informed choice to keep it.”
“These potentially include people who are caring for children, people in the gig economy, people with chronic illnesses and indigenous communities.”
Super funds have been trying to contact members about the changes. AIST spokesperson Ailsa Goodwin said: “If you have received a letter or email from your super fund, make sure you read it.”
The groups said people wanting more information about the changes could contact their super fund, the National Debt Helpline (on 1800 007 007), or visit ASIC’s MoneySmart website.