Speaking at a media briefing on Friday, CommInsure executive manager for insurance tech and business delivery, Jeffrey Scott, said new insurance held inside super from July 1 this year will need to align with amendments to the SIS Act.
“[The former government] was aware people were paying for TPD benefits in super and at claim time they weren’t able to get those benefits paid to them because they weren’t able to meet the conditions of release,” Mr Scott explained.
“Bill Shorten didn’t like that fact, so he implemented change through the SuperStream legislation back last year to ensure that any insurance definition inside super would meet an automatic condition of release as of 1 July 2014, for new policies issued.”
Mr Scott said there were significant changes implemented with the definition of total and permanent disability (TPD).
From 1 July 2014, the only definition that will be permitted will be the ‘any occupation’ definition, meaning the ‘own occupation’ definition of TPD will be prohibited from any new policies after July 1, Mr Scott said.
As a result, two of CommInsure’s products will be changing – the ‘Total Care Plan Super’ and ‘Total Care Plan/Income Care Range’ policies issued to SMSFs.
For example, in reference to ‘Total Care Plan Super’, the CommInsure definition of ‘any occupation’ TPD presently allows for the insured to be treated as TPD even if they are able to generate an income of up to 25 per cent of their pre-disability earnings.
“This is currently inconsistent with the SIS definition of ‘permanent incapacity’ and we have removed it from the CommInsure definition,” CommInsure stated.
CommInsure is also launching a new insurance product for SMSFs, which the bank says is in response to a “growing market need.”
“There are more than 960,000 SMSFs in Australia, and less than 13 per cent have insurance,” Mr Scott said.
