An ifa reader poll on what stance the federal budget should have taken on insurance in super found 85.1 per cent of the more than 2,000 respondents believed opt-out arrangements should be kept.
Only 4.1 per cent of respondents supported the budget proposal to change group insurance arrangements to opt-in for members under 25 years old or with a balance of less than $6,000.
The remaining respondents believed the system should either be changed to opt-in for all members, representing 7.9 per cent of respondents, or left to the discretion of funds, accounting for the final 2.8 per cent.
The data indicates that advisers are at odds with a number of insurance industry players, including the Financial Services Council and Clearview, both of which have backed a shift to an opt-in arrangement for younger members.
In a statement, ClearView managing director Simon Swanson described the proposed change as “sensible public policy”, adding that an opt-in system would “result in a substantial improvement in understanding what cover they have and don’t have”, and curb balance erosion caused by unnecessary fees.
The Productivity Commission also threw its support behind the change in its Superannuation: Assessing Efficiency and Competition draft report, saying the balance erosion caused by insurance premiums was “not insignificant”.
Hardly surprising – Self-interest at its best, default insurance hurts the IFA’s business model…
That is true and that is what ‘opt out’ is. That is, a member gets default insurance unless they opt out. Surely this result suggests that advisers do think in terms of clients’ best interests.
Opt out is better.. I have yet to meet a widow/widower who begrudged too much insurance. This policy basically presumes that all under 25s are debt free (unlikely) and not in need of cover (also unlikely). People forget that it is sometimes only the meagre super fund cover that is all some people can get due to health conditions etc later on.
If this policy is implemented does cover get switched back on at age 25 irrespective of account balance?
Wouldn’t some education to younger people be better policy?
The key risk with the government’s proposal, aimed at young people, is not the risk of death but the risk of sickness or injury that leaves them unable to work.
How was this survey conducted? Every adviser I know supports the Government’s stance, to ban super funds from signing up clients to insurance without the permission of the member.
How many advisers do you know Skeptical? – obviously not many. The majority of under 25’s have no care for insurance and think they are invincible. It should be an opt out policy as so many people are lazy.
I know dozens of advisers and not one of them supports opt-out. The survey is baffling. Default insurance arrangements are not good for advisers at all and we regularly see the damage these insurances inflict on unsuspecting young workers (many of whom could not claim on the cover even if they became sick or died). I would love to know the real occupation of those who voted. I doubt many were actually advisers at all. Unless they are presiding over a grandfathered corporate super plan or working for an industry fund. In which case, they are only advisers by name and not really giving professional advice at all.