Powered by momentummedia
nestegg logo
Powered by momentummedia
Powered by momentummedia
nestegg logo
nestegg logo

 

 

Invest

Over 650,000 members lose insurance from early super

By Sarah Kendell
  • August 20 2020
  • Share

Invest

Over 650,000 members lose insurance from early super

By Sarah Kendell
August 20 2020

More than 650,000 super fund members are projected to lose their life insurance as a result of the government’s early release scheme, new research has found.

Over 650,000 members lose insurance from early super

Over 650,000 members lose insurance from early super

author image
By Sarah Kendell
  • August 20 2020
  • Share

More than 650,000 super fund members are projected to lose their life insurance as a result of the government’s early release scheme, new research has found.

Over 650,000 members lose insurance from early super

Research house DEXX&R’s Market Projections Report projected total group insurance premiums for the year to fall by $226 million by December 2020, as Australians continue to withdraw funds from their super accounts.

The group said around 660,000 fund members were predicted to lose their insurance cover as a result of their account balance falling below the threshold for premiums to continue to be deducted.

“It will be several years before many of these members again have a balance at a level where they are eligible to receive default insurance cover,” DEXX&R said.

As a result, growth in the group insurance market was expected to be flat for the foreseeable future, with lump sum in-force premiums growing by just 1.8 per cent per year until 2029. New annual premiums were projected to fall by 11 per cent per year to $284 million by December 2029, down from $860 million in December 2019.

Advertisement
Advertisement

“The lower projected lower growth rates for both new and in-force group premiums reflect the impact of the COVID-19 super early release scheme, higher unemployment leading to a reduction in the number of active accounts eligible for automatic cover on an opt-out basis, and slower growth in account balances as the result of underemployment with little or no growth in wages and salaries over the next five years,” DEXX&R stated.

Moreover, the assumptions in the group’s modelling included the legislated increases in the super guarantee, which the government flagged this week may not go ahead.

The report stated that if the SG was not increased, growth in the group insurance market would be “further reduced”.

Meanwhile, the group said the impact of the crisis on the retail risk market would be “minimal”, with “a small impact” arising from clients taking out benefit suspensions while their working hours were impacted by lockdown periods, and further lapses expected to flow through as unemployment rose in the years following the crisis.

“Existing pre-COVID issues faced by insurers are expected to have a greater impact on subdued growth in new and in-force [retail] premiums over the next five years. These issues include a fall in number of advisers actively recommending risk products,” the report stated.

DEXX&R projected in-force term life and TPD premiums in the retail channel to grow by 1.5 per cent per year to December 2029, while trauma in-force premiums were expected to grow by 1.5 per cent per year and disability income in-force premiums would grow by 2.6 per cent per year.

Over 650,000 members lose insurance from early super
Over 650,000 members lose insurance from early super
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

more on this topic

more on this topic

From the web

Recommended by Spike Native Network

More articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.