HESTA hikes default insurance cover

The $55 billion industry fund is hiking the cost of its standard insurance cover for most of its members, with those aged 55 to 64 years to be the worst hit.

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) to age 67 and two units of death cover to age 75. It does not include total permanent disability cover (TPD).

Effective April, the cost of IP will go up, while the cost of death cover will come down.

The net effect spells an increase in the cost of default cover for most HESTA members.

The only exception is the 67 to 74 age group, whose fee for standard cover will become about 10% cheaper as it declines from the old $1.16 a week to $1.04 a week.

The 55 to 64 year old bracket will see the highest jump - going from $7.67 in current estimated net insurance fee to $8.7 after April 30.

The rise in net standard insurance cover cost by age groups will be: 15-24 years (7.7%), 25 to 34 years (8.5%), 35 to 44 years (9.97%), 45 to 54 years (12.4%), 55 to 64 years (13.4%), 65 to 66 years (1.6%) and 67 to 74 years (decline of 10.3%).

The average HESTA member is 42 years old.

A HESTA spokesperson said changes to insurance pricing were carefully considered.

"The way that super funds provide insurance cover to members and when their insurance cover must be cancelled has changed as a result of Federal Government legislation introduced in 2019. These changes mean that the HESTA insurer has had to review the insurance fee that members pay.

"For many of our members, the cover they have through their super may be the only personal insurance cover they have," the spokesperson said.

HESTA's group insurance is provided by AIA Australia.

TPD, which is not a part of the standard cover at HESTA, has remained unchanged after the review.

HESTA is not the only one to rejig its insurance fee after PYS changes. Other funds who also changed fees include MTAA Super and Rest.

Read more: HESTAAIA Australia
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