According to a Life Insurance Customer Group (LICG) survey, submitted this week as part of a document tabled to the Parliamentary Joint Committee inquiry into the life insurance industry, 96.8 per cent of advisers surveyed said trustees should disclose their level of remuneration.
The LICG said such disclosure is “to ensure customers are fully informed about the factors that could influence their decision about the appropriateness of the insurance that the trustee is offering”.
It said this disclosure should apply to the quote/application form as well as in the Financial Services Guide of the super fund.
The survey, Insights into group insurance offered by super funds, also showed 94 per cent of advisers believe there should be a minimum standard of definitions and exclusions in group policies offered by trustees.
This is to ensure customers are not left exposed, the LICG said.
In addition, 97.1 per cent of advisers said super fund trustees should have standard ways of collecting evidence for claims.
Also, 89.7 per cent of advisers think super funds should have a mandatory requirement to provide projections and alert customers when their insurance premiums exceed the income earned by the fund or reduce the annual super balance of the client’s account.
The survey was based on 281 responses collected from advisers between 10 and 22 February this year.
We must go further than this. All remuneration should be banned unless the client has opted into the insurance. I’m sick of seeing young people with low balances getting ripped off with multiple policies that were never agreed to. The profits are used to artificially reduce the fees. As a result, the financially literate with higher balances are feeding off the young, low income workers like the Morlocks feeding on the Eloi in the HG Wells classic. If profits are to be delivered back to members, as claimed by the industry funds, then the profits should go back to the individually insured members via a reduced premium. Not re-directed to other members via a reduced fees.