An industry superannuation fund has swapped out Hannover Life as its provider for income protection cover, amid an overhaul of its insurance offering.
NESS Super (New South Wales Electrical Superannuation Scheme) managed about $760 million in superannuation savings for about 14,000 electrical industry employees at the end of last financial year.
It has so far provided income protection insurance to members through Hannover.
Starting end of this month, NESS will switch income protection cover to Chubb.
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The old IP cover was calculated on a fixed cost per unit basis. Members paid a premium of $1.28 per week, to get a default cover of up to $2550 for a month for two years in times of illness or injury. They could buy additional units if they wanted greater cover.
Under the new arrangement with Chubb, members will be covered for 85% of their pre-disability income. The fund has set the default premium at 1.76% of the superannuation guarantee contribution.
In a new addition, NESS has extended income protection insurance to self-employed electricians. The premium is priced at $0.7623 of every $100 ensured, with the maximum monthly benefit capped at $25,000.
However, the fund will cease to provide long-term salary continuance insurance.
"The decision was taken due to...the low number of members who have opted into this insurance...and our new income protection cover provider Chubb Australian Insurance not being able to provide such a product," NESS told members in a statement.
Group life cover reduces significantly
Hannover Re will continue to provide group life insurance for the fund.
However, the fund is reducing the death insurance cover significantly for all ages except the 35 to 45 age group.
"Our modelling shows that the most likely age of claiming is between 35 and 45 where our cover is at its maximum level. This also matches the period of life when financial commitments are typically the highest (young children, mortgages etc)," it said.
Similarly, the TPD cover is going down for younger and older members, except for the 35-39 age (roughly).
"The same rationale has been applied to our TPD offering, that younger members do not claim on TPD Insurance and older members are likely to not need as much TPD insurance as they approach their retirement," the fund said.
The changes come into effect end on November 30.