Group insurance provides an important safety net for many Australians who would not be able to afford life insurance otherwise, according to the Financial Services Council (FSC).
Speaking at the Life Insurance Conference recently, FSC chief executive Sally Loane said policymakers are questioning what role group insurance should play in the future and how it should be structured.
Ms Loane said the current opt-out mechanism within group insurance needs to be preserved.
“Without this, people would slip through the net,” she said.
“It would also make insurance more expensive, potentially pricing out or removing access for many Australians who receive cover today.”
Ms Loane said Australian super fund members received $4.4 billion in insurance claims benefits through their group insurance cover in 2015.
“Ninety-two per cent of the working population is afforded some type of insurance cover that would not otherwise be in place without group arrangements,” she said.
“Many Australians, for example those working in heavy industry or with a pre-existing medical condition, may not be given access to any cover at all if it wasn’t provided in their workplace fund.”
Ms Loane added that the recently released FSC Code of Practice will be extended to cover super trustees in group insurance.
“To this end, we are working with other industry associations, CHOICE and insurance product providers in yet another group – the Insurance in Superannuation Working Group,” she said.
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