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Study confirms value of IP insurance within super
Income protection insurance within superannuation is seen as highly valuable, according to the results of a study undertaken by major life insurer, AIA Australia.
The study, the results of which were released this week, revealed that two in five Australians would feel the impact of losing the primary income earner's salary within a month of that person not working.
The AIA Australia Life Today study surveyed 1,000 people and found that some form of income protection is seen as one of the most valuable components of life insurance.
When people were asked to rank the different types of benefits, almost a third ranked income protection as the most important component, but AIA Australia noted that only 21 per cent of Australians surveyed had income protection.
Commenting on the findings, AIA Australia Group chief insurance officer, Stephanie Phillips said the results supported many of the product design initiatives being undertaken by superannuation funds in response to members' needs and ensuring ongoing sustainability of premiums.
"There is an increasing shift to offering income protection, extending income protection benefit periods, better aligning benefits for temporary and permanent disablement and changing how lump sum disablement benefits are paid e.g. by instalment," she said. "In all instances, a focus is maintained on assisting the member while they regain the capacity to return to work, if possible."
Phillips said the challenge for trustees was ensuring that insurance benefits supported a member's endeavour to return to work, recognising that the cost of insurance was reducing the member's retirement savings.
"Achieving this balance is difficult but achievable," she said.
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Group Insurer suggesting IP in super is a good thing???!!!. Inferior contract, massive drain on retirement savings, tax deductibility is to the fund not the member. Unless they can not afford it any other way, IP in super, group or otherwise, not a good idea.