Insurance premiums are changing

insurance premiums

On 1 October 2020, the cost of insurance cover will change. How much you’ll pay depends on the type of cover you have. While there’s never a good time to increase prices, we recognise this may be difficult news in the current environment.

The Government’s recent changes to insurance in super have led to an increase in costs, which means we’ve had to increase our insurance premiums for Death and Total and Permanent Disablement (TPD) cover. We’ve also had to make some changes to our Income Protection (IP) cover.

We work closely with our insurance partner, TAL, to ensure any price increases are as reasonable and transparent as possible. We only charge what it costs us to provide insurance cover.


What are the changes?

Premiums have been reviewed in response to:

  • the increasing cost of insurance claims, particularly for mental health conditions
  • the impact of the Putting Members' Interests 'First (PMIF) legislative changes; and
  • the low inflation/investment return conditions.

These factors have been reflected in the new insurance premium rates for Death and TPD cover and IP cover.

There’s no change to the inbuilt benefits provided to Defined Benefit Division (DBD) members.

Income Protection cover changes:

The premiums for our ‘to age 65’ benefit will significantly increase for members aged under 60 years, due to a substantial increase in the cost to provide this cover.

The changes we’re making to the 2-year, 5-year and ‘to age 65’ benefits will ensure the premiums we charge align with the costs of providing each type of cover.

The changes to insurance premium rates that will apply from 1 October 2020 are:


Insurance type Change in premiums on

1 October 20201
Death and Total and Permanent Disablement (TPD) Up 9.5% to 17.8%
Death only Up 11.4% to 15.4%
TPD only Up 8% to 14.3%
Income Protection – 2 years Down 40.9%
Income Protection – 5 years Up 11.8%
Income Protection – ‘to age 65’ Up 133.3%

1Actual rate of increase varies depending on your age and cover type

You can access the new insurance premiums that apply from 1 October here. To help you understand how the new insurance premiums may affect you, we’ve provided some examples of each type of cover below2.

Note if your cover has a premium loading, the premium loading applies as a factor to the calculated premium. For example, if your calculated annual premium for your age and cover level is $100 and you have a premium loading of 50%, the premium loading is calculated as 50% x $100 = $50. The annual premium that applies incorporates the calculated premium of $100 plus the premium loading of $50, which equals $150.

Unitised cover: an example

Amalia’s 38 years of age and has 1 unit of Death and TPD cover, which would give her $181,000.

Currently: Amalia pays $1.85 per unit per week or $96.20 each year.

From 1 October 2020: Amalia will pay $2.08 per unit per week or $108.16 each year. The cover will change according to her age.

The premium is deducted from her accumulation account/component.

Fixed cover: an example

David’s 51 years of age and has $100,000 of Death and TPD cover.

Currently: David pays $2.14 per $1,000 of cover, and his total cost will be $214 each year (or $4.12 per week).

From 1 October 2020: David will pay $2.43 per $1,000 of cover, and his total cost will be $243 each year (or $4.67 per week).

The premiums payable will change according to his age.

Income Protection cover: an example

Sue’s 49 years of age and has 15 units of Income Protection cover, with a two-year benefit period and a 60-day waiting period.

Currently: Sue pays $45.41 per unit and her total annual premium is ($45.41 x 15) = $681.15.

From 1 October 2020: Sue will pay $26.83 per unit and her total annual premium will be ($26.83 x 15) = $402.45.

The premiums payable will change according to her age.

2 Premiums shown include stamp duty and an administration fee of 6% of the insurance premium, charged to cover the costs associated with administering the insurance arrangements. The administration fee is inclusive of GST and any tax credits applicable to UniSuper. Please note, insurance premiums aren’t fixed and can be expected to change from time to time. Members will be given written notice of any changes.


Other changes

Activities of daily living

We’re removing the activities of daily living test from our Total and Permanent Disablement (TPD) definition, so that our TPD definition aligns to the TPD conditions of release under superannuation law. The current definition is on p34 of the Insurance in your super booklet. 

Excluded occupations

The excluded occupation test for Income Protection cover has been amended to apply when cover commences. This means if a member has Income Protection (and their occupation at the time cover commenced wasn’t excluded) and later changes employment to an excluded occupation, they’ll continue to be covered. The current definition is on p25 of the Insurance in your super booklet.

Pandemic exclusion

While our insurer (TAL) could invoke a pandemic illness exclusion on Income Protection cover, our insurer has advised us they won’t apply this exclusion to UniSuper members, so we’re removing this condition from our group insurance policy.

If you’re unsure about how these changes might affect you, call 1800 331 685 or speak with a super consultant.

Frequently Asked Questions:

  • Why are insurance premiums increasing?

In line with the broader industry, the number of claims being paid to UniSuper members, particularly in relation to mental health conditions, has increased. This means the cost of insurance needs to increase to cover these claims and to ensure we continue to pay any future claims.

The Putting Members’ Interests First legislation came into effect on 1 April 2020. Members with an account balance of less than $6,000 needed to elect to keep their insurance. Those members who needed that insurance—due to health or other reasons—were more inclined to keep their cover, while other members chose not to keep it. This means we can expect to pay a similar level of claims but with less members paying insurance premiums. This cost is mainly to Death and TPD cover.

The cost of our default cover will increase by $0.23 per week, i.e. from $1.85 per week to $2.08 per week.

In addition, through late 2019 and early 2020, UniSuper tested the insurance market, to ensure our insurance premiums are priced competitively and appropriately according to our claims experience.

The result of this tender process showed our Income Protection cover required a premium increase for the 5-year and ‘to age 65’ benefits, for them to remain sustainable.


  • Have there been other factors that have contributed to the significant increase in Income Protection cover?

It’s evident that our long-term ‘to age 65’ benefit requires a more significant premium change than the shorter 2-year and 5-year benefits, so we’re aligning the premiums charged to the claims experience for each benefit period.

Many factors contribute to the higher-than-expected cost of our longer-term Income Protection, but the premium increase is mostly due to the increasing prevalence of mental illness claims, the low inflation/investment return conditions and aligning the costs of providing the benefit with the premium charged.


  • Are the increases the same for all members?

Premium changes will apply consistently across the membership for each type of cover.

Note:

Members aged between 60 and 63 who have the ‘to age 65’ benefit would only be paid a benefit for up to 5 years, so are charged the premium that applies for the 5-year benefit, and

Members aged between 63 and 65 with a ‘to age 65’ or 5-year benefit would only be paid a benefit for up to 2 years, so are charged the rates that apply for the 2-year benefit.


  • What are my options if I hold Income Protection to age 65 and I don’t want to accept the increase?

To maintain Income Protection cover, you can reduce your benefit period to either 5 years or 2 years at any time, which will reduce the premium payable. If you have a 30 day or 60 day waiting period, you can also increase your waiting period to up to 90 days and this will reduce your insurance premium.

Likewise, if you no longer require the cover, you can cancel the cover at any time. Before making a decision, we recommend you seek financial advice.


  • When will the premium changes flow through to the quote on online accounts for existing DBD members considering moving to Accumulation 2?

Premium rates will be updated throughout UniSuper systems on 1 October 2020.


  • How do I calculate my new premium if a premium loading applies to all or part of my cover?

You’ll need to know what premium loading applies, and to which part of your cover.

For example, if your premium is calculated as $100 p.a. without the premium loading and a 50% premium loading applies, the premium payable is $100 p.a. + (50% x $100 p.a.) = $150 p.a.

If you’re unsure, we’re here to help. Please call us on 1800 331 685.