Along with other costs that are going up as they continually do, insurance premiums in the group life and disability areas (policies that cover large groups such as large super funds etc) are on the rise now. It is possible that rates could rise substantially.
Sally Patten writes: “Consumers face life insurance premium rises of between 30 per cent and 40 per cent over the next three years as a weaker economy drives up claims, insurers are required to hold more capital and individuals grow more aware of their rights. Last month, the $3 billion Media Super scheme raised insurance premiums by an average of 45 per cent for its 110,000 members. While other superannuation funds renegotiating insurance contracts are unlikely to have rises of that magnitude, double-digit increases are expected.” Reported 15 January 2013 The Australian Financial Review, page 3.
Tony Boyd reports in The Australian Financial Review, 15 January 2013, page 40:
“The freeloaders who have used industry superannuation funds to obtain cheap death, disability and income protection cover are getting a rude awakening as insurance risks in the $4 billion-a-year group life market are repriced sharply upwards. The 45 per cent increase in insurance premiums imposed on the 110,000 members of Media Super from December 1 is a prime example of what can happen when industry players are forced to face up to the financial impact of poor claims experience and higher regulatory capital requirements.”
Insurance for Self Managed Super Funds (SMSF) is not as cheap as group purchase, and new requirements will mean SMSFs will need to consider member insurance requirements annually – for more, see New Regulation – Insurance.
What else do you need to consider about insurance needs in your SMSF? – see Insurance in SMSF.
What are you doing about insurance in your SMSF? – Leave a comment/thought