If you have inactive superannuation accounts, any insurance that was included inside will soon be cancelled. Here’s how to take control and make sure you and your loved ones remain protected.
“The new Protect Your Super (PYS) legislation comes into effect on 1 July 2019, and applies to inactive accounts which have not received a contribution for 16 months or more,” explains MetLife’s Head of Public Policy, Cathy Duloy. “Insurance attached to these accounts will automatically be turned off – unless customers contact their fund and opt in to keep it or make an extra contribution to their account.”
The changes were first mooted in a 2018 Productivity Commission report, which recommended that insurance should only be provided on an 'opt-in' basis for inactive accounts.
“Insurance within superannuation was often provided automatically by default when you signed up with an employer or fund. Some people don’t realise they have this insurance they didn’t ask for, and are paying for,” Cathy clarifies. “The government took the view these insurance premiums were unnecessarily eroding people’s retirement balances, particularly for those with multiple accounts or low balances.”
If you’re likely to be impacted by the new laws, Cathy suggests there are several things to consider doing:
- Find ALL your super accounts - even those you might have forgotten about. You can do this via your fund or by checking the mygov website.
- Check with your fund how much insurance you have inside super for benefits including Total and Permanent Disablement (TPD), life insurance, and income protection
- Contact your super fund about whether you want to opt in and keep your insurance. Be aware that depending on the terms of any existing policy, you may need to be underwritten to keep that cover if it has already been cancelled
“For many people, PYS might be the best thing, as they may be paying for insurance they weren’t aware of,” Cathy adds. “But for people who deliberately maintain an account because of the default insurance, and who may not be able to get insurance elsewhere, they’ll need to either opt in or make a contribution to their account before their account has been inactive for 16 months.”
Cathy warns it is essential to find out if your cover is about to stop: “You don’t want to suddenly find out you’re not covered in the event someone passes away, is seriously injured or becomes ill. With the new laws coming into place, it’s a good time to sit down and work out if your current insurance cover is adequate for your needs and life stage.”
You can also have a look at the timetocheck.com.au website to see the simple steps you can take. This website has educational tools for members to help them navigate these changes.
