Changes to insurance within super

On 1 July 2019, the Government’s ‘Protecting Your Super’ legislation became effective. The changes were designed to protect peoples’ superannuation and related to insurance cover, fees and lost super accounts.

On 1 April 2020, the next round of reforms will start. Called ‘Putting Members’ Interests First’ (PMIF), they’re designed to prevent small account balances from being unnecessarily reduced by insurance premiums.

This means that from 1 April 2020, super funds can no longer provide default insurance to new members who are under the age of 25 or to members with a ‘low balance’. A member is considered to have a low balance if, from 1 November 2019, their account balance has never reached $6,000.

Currently, members who join their employer’s super plan automatically receive insurance cover regardless of their age or account balance.

How do the PMIF rules affect you?

Answer the questions below to find out how the new rules affect you.

When was your super account opened?

Before 1 April 2020

On or after 1 April 2020

How was your account opened?

On an application form

Default through my employer

Are you under 25?

Yes

No

Has your account balance always been under $6,000?

Yes

No

Have you opted in to retaining your insurance prior to 1 November 2019, even if you don’t receive contributions into your account?

Yes

No

Your insurance will continue on your account, subject to the payment of premiums. You can cancel your cover at any time

Have you specifically requested insurance or made a change to your insurance before 1 November 2019?

Yes

No

Any insurance attached to your account will remain provided you:

  • Continue to receive contributions into your account (at least one contribution every 16 months)
    OR
  • Opt-in to retaining your insurance even if you stop contributing

Has your account balance reached $6,000 at any time post 1 November 2019?

Yes

No

Have you received an insurance inactivity notice from us?

Yes

No

Your insurance will be cancelled on the earlier of:

  • 1 April 2020 if your balance does not reach $6,000 and you don’t opt-in for low balances
    OR
  • The date specified in your inactivity notice if you don’t make a contribution or opt-in for inactivity.

Your insurance will be cancelled on 1 April 2020 unless:

  • You opt-in to retaining your insurance even though your balance is under $6,000
    OR
  • Your account balance reaches at least $6,000 any time between 1 November 2019 and 1 April 2020
Your insurance may be cancelled at a future date if you do not make a contribution at least every 16 months or opt-in to have insurance even if you do not contribute.

You may receive default insurance cover when:

  • Your balance first reaches $6,000 and you are over 25
    OR
  • Your employer pays for your insurance in full
    OR You are in a dangerous job
    OR
  • You opt-in or apply for insurance (conditions apply)

Any insurance attached to your account will remain provided to you:

  • Continue to receive contributions into your account (at least one contribution every 16 months)
    OR
  • Opt-in to retaining your insurance even if you stop contributing

How do the PMIF rules affect existing members?

If your super account includes insurance but your account balance has not reached $6,000 at any time since 1 November 2019, your cover will be cancelled on 1 April 2020 unless you ‘opt in’.

To opt in, login to your account, navigate to the insurance section and select ‘opt in’.

You will also be considered ‘opted in’ if you made any of the following changes before 1 November 2019:

  • completed an application form for insurance (ie you did not receive default insurance)
  • applied for an increase in your insurance cover
  • told us about a change in your smoker status or occupation to keep your insurance cover up to date
  • transferred insurance from another super account
  • opted in under Protecting Your Super to keep your insurance even if you are not contributing to the fund.
If your balance was under $6,000 on 1 November 2019 and you haven’t opted in, we will write to you. Please refer to the FAQs for more information. 

How do the PMIF rules affect new employer fund members?

If you joined your employer’s super fund after 1 April 2020 you won’t be provided with insurance automatically if you are aged under age 25, or if you have a low account balance. Once you reach age 25 and have a balance of $6,000, the fund may provide you with insurance automatically, subject to certain conditions.

You can choose to ‘opt-in’ to have insurance at any time. If you opt in, you will receive a default level of insurance cover regardless of your age or account balance and insurance premiums will be deducted from your super account to cover the cost of the insurance.

For more information please contact ClientFirst on 1800 913 118.

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Issued by IOOF Investment Management Limited (IIML) ABN 53 006 695 021 AFS Licence No.230524. IIML is the Registrable Superannuation Entity (RSE) Trustee, RSE Licence No. L0000406, of the IOOF Portfolio Service Superannuation Fund (Fund) ABN 70 815 369 818. The information in this document is general information only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser. You should obtain and consider a copy of the Product Disclosure Statement available from us by visiting our website (www.ioof.com.au) or your adviser, before you acquire a financial product.