Data challenges group insurance change effectiveness

The research, conducted by Rice Warner, found the opt-in insurance model proposed by both the federal budget and the productivity commission’s superannuation efficiency draft report would result in individuals’ retirement balance increasing by only $1,400, or 0.27 per cent.

“AIA considers this to be inadequate when considering that life insurance claims and benefit payments for under 25s are growing each year, and that the proposed reforms would be offset by the potentially devastating physical and social impacts a member would experience in the event of a serious injury or illness,” AIA said in a statement.

AIA Australia and New Zealand chief executive Damien Mu said the research casts doubt on the effectiveness of a change in group insurance arrangements.

“This data raises legitimate questions as to the value of such reforms, where members will forgo valuable protections for a minimal financial gain in retirement. The cost savings are inadequate when considering the increased health and financial risks for under 25s,” he said.

“There are unintended consequences to these measures, including that premiums for remaining insured members will increase across their working life.”