A prominent law firm is calling for upcoming changes to default insurance within superannuation to be postponed, as the COVID-19 pandemic increases the chance Australians will need to rely on the cover automatically provided by their super fund.
Slater and Gordon believes the government's suite of insurance in super reforms should be put on ice until after the threat of COVID-19 has passed, as the changes remove insurance for groups of Australians who are potentially vulnerable to the disease.
After successfully passing in 2019, the government's flagship insurance reforms - the Putting Member's Interest First and Protecting Your Super bills - are set to cancel default insurance inside superannuation for members under the age of 25, with less than $6000 in their fund, and with inactive accounts for a period of 16 consecutive months.
While some provisions are already in force, the majority of the reforms is set to take effect from April 1, putting vulnerable Australians at risk, according to Slater and Gordon principal lawyer Annemarie Gambera.
"When people are facing financial uncertainty or the potential of being ill, they need to ensure they have access to these benefits in case they lose the ability to work," Gambera said.
Gembera said that while the Royal Commission focused on consumers being overcharged for unnecessary fees and junk insurance, Australians need to understand why it's important they are not losing the ability to make a valid claim.
"Losing your super insurance could have catastrophic consequences if you are injured or become ill and at risk of losing your main source of income after not being able to work," Gambera said.
"Many people under 25 are studying or working in casual roles in hospitality, retail and tourism, and may need to access income protection or make a workers' compensation claim if they find themselves out of work for weeks at a time if they contract the virus."
Gambera pointed out those with existing health conditions, single mothers, and migrant workers with low balances would be among the most vulnerable people in Australia should they be left without life insurance cover in the instance of a death or loss of job as a result of the outbreak.
"We believe the changes scheduled for next month should be delayed until after the COVID-19 threat has passed so families don't miss out on insurance if a loved one were to die after contracting the virus," she said.
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