Face of Nation International : Paul Watson from Berrill and Watson Lawyers said the new laws would likely leave hundreds of thousands of people facing the coronavirus pandemic without life or disability insurance.
“Ultimately we could have a really negative impact here if we have a scenario in which people, particularly people in significant numbers, become sick or die as a result of coronavirus,” he said. “If that was to happen after 1 April 2020 and people have lost their insurance cover, that would be terrible.”
Approximately 12 million Australians hold insurance policies through their superannuation, but a Productivity Commission report last year found many people’s savings had been eroded by more than $50,000, due to duplicate or redundant policies.
The Federal Government passed legislation last year cutting off life insurance for inactive super accounts with balances that have never been greater than $6,000, and for new account holders younger than 25. The new laws were intended to stop fees and insurance premiums from eroding super balances over time — but in the face of coronavirus, they may end up removing an insurance safety net when it’s needed most.
Mr Watson said at a time like this, most people would not want their policies cancelled. No-frills default funds, such as MySuper accounts, have been required to provide a minimum level of insurance cover since 2005.
Unless low-balance account holders contact their superannuation fund to keep their life and disability insurance in place, these policies will be automatically cancelled on April 1. (Source: ABC News – Australia)
