An industry superfund took its last insurance review as an opportunity to start again from basics, and undertake a complete revamp of its product to better serve the diversity within its members.
NGS Super has announced it will launch its new superannuation insurance product on 1 July and begin to transition all members to the new design.
The fund started again from a blank canvas to better tailor its insurance offering in order to both meet members needs more effectively, and solve the problem of under and over insurance within the fund.
The benefits of this insurance will go up as people age, in line with their income and typical member needs. The other change is that the default income protection coverage lasts for up to five years, reducing the emphasis on TPD.
spoke to NGS Super general manager Laura Wright and product manager John Pederson about the product.
Pederson said it’s an advance on what other funds are doing in terms of how it’s progressed to a needs-based member idea.
“I think it will be the new industry standard going forward,” he said. “To be able to have an arrangement where the majority of members will have coverage increased without having to go out and fill out forms is a huge advantage.”
Under the old “one size fits all” insurance, different generational groups were being treated as the same, leading to both over and under insurance, said Wright.
“It just makes sense to say, ‘why would young people need hundreds of thousands of dollars of death cover at age 22?’ In some ways it seems like a no brainer,” she said.
Premiums will change with the new product – the younger members who are currently over insured will have a drop in cost, while there will probably be a slight cost rise for the older members.
In this way it is taking more of a user-pays approach, Pederson said.
NGS Super started work on the new product about a year ago alongside actuarial consultant Jeff Humphreys. Premium and member testing was undertaken, and the reactions were mainly positive, Wright and Pederson said.
Members can dial up or down their cover and apply for additional cover, they said.
The fund’s insurer, CommInsure, has committed to premium levels for the next three years.
NGS Super will also introduce “WriteSmart”, an electronic interface platform that includes the ability to apply for cover online, which will make the insurance journey easier and faster, said Pederson.
He is constantly surprised by how people never focus on the relative cost of life insurance compared to that of other types of insurance.
He gives the example of his home insurance, which is far more expensive for far less cover than his life insurance in monetary terms.
“In the past [choices] have been more driven by competition, but I think more funds will look at this and say, ‘we do need to address the needs of our members rather than what our competitors are doing’.”