For the second time in a year, the $52 billion superannuation fund is increasing the total cost of its standard group insurance cover for members.
HESTA’s standard insurance cover — which eligible members automatically receive upon signing up unless they make a choice — includes two units of the income protection (IP) and two units of death cover. It does not include total permanent disability cover (TPD).
For most HESTA members on it, overall insurance fees will increase from four cents to 22 cents a week, across all age groups on a net insurance fee basis. The changes come into effect on March 1.
Within the standard cover, income protection is seeing three main changes: lower fees, higher monthly benefit payment (up from $475 to $500) and shorter benefit payment period (five-year cap, compared to previous period of up-to age 67).
HESTA chief operating officer Stephen Reilly said more than 66% of HESTA’s accumulation members currently have insurance via the fund. of which 90% use the standard cover.
"This change [shortening of IP benefit period] was based on analysis that showed that 70% of members now claim a benefit for less than five years. Continuing to provide income protection cover to age 67 would have meant significantly increasing premiums. However existing members can choose to continue this level of cover, if they wish," Reilly said in a statement.
"Our unique cover provides access to rehabilitation and support to help members return to work and continue earning. This includes eligible members being able to claim a $10,200 permanent incapacity support payment after two years on claim. This payment can go towards helping in either their re-education or refitting their home to cater for a permanent disability."
Standard death cover will go from maximum benefit of $5 million to $3 million.
As an example, a HESTA member aged 45-54 will go from paying $7.70 per week in estimated net insurance fees to $7.92 per week.
In April 2020, HESTA hiked the standard cover’s cost by 1.6% to 13.4% for the age groups below 67.
Reilly said it was too early to say what impact COVID-19 would have on insurance premiums."Changes to HESTA’s insurance on 1 April 2020 were impacted by legislative change that meant fewer members were insured. We worked closely with our insurer to minimise changes to insurance pricing, which included a decrease in the cost of death cover. While there was an increase in the cost of income […]
