Big insurance mistake Aussies are making
MANY Australians have no idea how much money they are paying for life insurance in their super fund, sparking calls urging people to check it's not unnecessarily eating into their life savings.
Concerning new research has revealed seven out of 10 Australians are in the dark about their insurance costs, revealing a dangerous disconnect between super fund members and their life insurance.
The MetLife analysis found almost half of parents of children aged under 18 believe they don't have cover, and 60 per cent of people say they wouldn't have life insurance if it wasn't automatically included in their super.
As well as increasing the financial risk of not having death, disability and income protection insurance, this lack of focus threatens to cost fund members more money.
After premiums surged a few years ago, they have generally stabilised and some fund members are now in line for cuts.
MetLife Australia CEO Deanne Stewart said it was a good idea for super fund members to check their insurance cover at least once a year, or when personal circumstances changed such as getting married or having a baby.
She said one reason for people's lack of knowledge about their premiums was that because insurance premiums were paid inside super they were not hitting people's hip pockets.
"Sometimes it goes below the radar," Ms Stewart said. "As humans we often focus on what's urgent, not what's important."
The fact that many parents were in the dark was "definitely a worry" as insurance cover for them was vital, and often should be higher than the basic cover provided by most super funds, she said.
Ms Stewart said it could take just five minutes to regain control. "Check what cover you actually have, and calculate what's right. Most super funds these days have simple calculators on their websites." A phone call to your super fund could complete the fix.
Some super savers will pay less for their insurance soon after the nation's largest super fund, AustralianSuper, last month announced it was cutting its premiums by 14 per cent for death cover, 6 per cent for total and permanent disability cover and 20 per cent for income protection insurance.
The cuts start in May, and industry sources believe other funds will try to follow.
AustralianSuper's group executive of membership, Rose Kerlin, said the fund used its size and scale to negotiate more affordable bulk rates for its members.
She said people should check they were not paying too much for insurance, and that they were not paying for insurance they might not need.
"Affordable and appropriate insurance provides members and their families with peace of mind and support when they need it most," Ms Kerlin said.
"Underinsurance is still an issue for many people in Australia, so taking the time to work out what sort of cover you or your family need is very worthwhile.
"It is important to weigh up the benefits of insurance against the cost."