HESTA has announced plans to revamp its insurance cover and to shift to an age-based pricing model, following an extensive review of members’ insurance needs.
The changes focused on enhancing insurance cover and shifting to an age-based pricing model, and would be effective from 1 March 2018.
Proposed improvements to insurance included a 12 per cent increase in the monthly income protection benefit, aligning the release of insurance benefits for terminally ill members with the 24-month regulatory requirement for access to super, and a better digital experience for members.
HESTA chief executive, Debby Blakey said that the insurance changes were designed to better reflect the insurance situations of fund members.
“For many of our members, the cover they receive through their super may be the only personal insurance they have. It’s why we have restructured insurance provided through HESTA to reflect where members will be in life,” she said.
The shift to age-based pricing is consistent with moves from superannuation funds to halt the erosion of super balances by the cost of insurance premiums.
Rice Warner analysed the effect on members of restricting cover and pricing to be age-based. They found that under the changes, a typical HESTA member who started work at 22 with default cover could pay approximately 10 per cent less over their working life in insurance premiums by age 67.
Blakey emphasised that HESTA would retain its income protection cover under the proposals. The fund has enhanced the existing cover so that it includes a new lump sum provision to provide eligible members requiring rehabilitation assistance with $10,200.
“The great thing about income protection is that it keeps the conversation open around rehabilitation, which is a key pillar of our cover,” Blakey said.
“Programs to assist rehabilitation are part of how we’re building the financial resilience of members by supporting them to stay connected with their networks as this is proven to aid overall wellbeing and recovery.”
The changes follow an extensive review by HESTA of members’ insurance needs. The fund sought input from Super Ratings and Willis Towers Watson on the broader insurance landscape and industry trends as part of the review.
