As we plan for the future, many find comfort in the idea that long-term financial preparations offer security during retirement and unexpected challenges.

However, recent insights suggest that many Australians may be unaware of important details within their financial safety nets, raising concerns about preparedness when support is needed most.

This lack of awareness can lead to unforeseen financial strain at critical moments.

Lyndal Jordon's story is a stark reminder of the importance of understanding our superannuation insurance cover.

After years of working in corporate roles and contributing to her super fund, Aware Super, Lyndal was diagnosed with gastric cancer in 2022.

Lyndal Jordon, battling gastric cancer, received a lower-than-expected insurance payout from her superannuation fund and insurer. Credit: peterschreiber.media / iStock

Facing an uncertain future, she expected her superannuation insurance to provide financial peace of mind.

Instead, she encountered a maze of confusion and frustration.

'You believe in the systems and processes that you've set up, and then you get this slap in the face,' Lyndal said, reflecting on the shock of receiving lower income protection and terminal illness payments than anticipated.

Her experience highlights a gap in communication and understanding that can have profound consequences during life's most challenging moments.

The survey conducted by Super Consumers Australia, which involved 1,526 respondents aged between 18 and 75, found that one in four Australians are unsure about their superannuation insurance cover.

This lack of awareness can lead to unexpected financial hardship, as was the case for Lyndal, who went from a high-six-figure salary to barely any income.

Aware Super, managing $180 billion in funds, apologised for Lyndal's difficulties but maintained that she was paid according to the default level of cover.

This default cover is often the baseline protection provided when a member joins a super fund, but it may not be sufficient for everyone's needs.

Lyndal's situation was further complicated by mergers within the super fund, which she believes led to her defaulting to a lower coverage level without clear communication.

The issue of superannuation insurance confusion is not isolated to Lyndal's case.

Over half of 25—to 29-year-olds are unaware that default insurance typically starts at age 25, and many Australians are paying for insurance they don't fully understand.

Xavier O'Halloran, chief executive of Super Consumers Australia, is calling for a Productivity Commission review to ensure super insurance meets Australians' needs.

The corporate watchdog ASIC has also taken notice, launching legal action against industry giants for their handling of death and disability claims.

Assistant Treasurer Stephen Jones and a Coalition-headed Senate inquiry have urged super funds to improve customer service and address potential conflicts of interest within the $4 trillion super industry.

Mr O’Halloran noted that ASIC’s legal proceedings and a rise in consumer complaints to AFCA highlight the scale of the issue.

'They've all had issues dealing with really long claims handling processes, and it's why the government has actually stepped in and said, 'we need a customer service standard to deal with this problem,' he said.

'Super funds are taking far too long to look after people at sometimes the most vulnerable points in their lives.'

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For our readers, this serves as a crucial reminder to review your superannuation insurance cover regularly.

Ensure you understand your coverage level and whether it aligns with your needs.

If you're unsure, don't hesitate to contact your super fund for clarification. It's also wise to monitor any changes that may occur, especially during mergers or policy updates.

Lyndal Jordon's call for greater transparency and support from super funds resonates with many.

As we age, the last thing we want is to be embroiled in battles over insurance claims.

It's time for super funds to step up and provide clear, consistent communication so members like Lyndal can focus on enjoying life, not chasing down elusive answers.

Key Takeaways

• Lyndal Jordon, suffering from gastric cancer, shares her experience of receiving less insurance payout than expected from her superannuation fund, Aware Super, and its insurer, TAL Insurance.
• Super Consumers Australia finds that one in four Australians are unaware of their insurance coverage in superannuation, with many paying for insurance they do not understand.
• ASIC has initiated legal action against superannuation industry giants over the handling of death and disability claims, highlighting significant issues with super funds' claims processes.
• There are calls for the superannuation industry to improve communication, transparency, and customer service, with suggestions to enshrine specific standards and timelines into law to protect consumers.

Have you faced similar challenges? How did you navigate them? We invite you to share your experiences with superannuation insurance in the comments below. Your insights could help fellow Australians better prepare for their future.

 

[Carleen]

Husband (66) had to give up work due to a work accident however the income protection insurance expires at 65 years. I wrote to our local MP requesting that the insurances inside the super schemes should expire at retirement age of 67 which he replied he'd raise it with his colleagues. Friends I've spoken to we're not aware of this.

 

[Johno54]

Insurance companies, quick to charge but SLOW to pay. That is if they can't connive our of it.

 

[Bill MacL]

Insurance is a minefield of rorts, everything should be written in plain English, not legal speak

 

[Gaena]

Husband (66) had to give up work due to a work accident however the income protection insurance expires at 65 years. I wrote to our local MP requesting that the insurances inside the super schemes should expire at retirement age of 67 which he replied he'd raise it with his colleagues. Friends I've spoken to we're not aware of this.

It really bugs me that Insurance companies whether private or through a Super fund are still locked into the age that the average worker is expected to retire, no thought is given to an individual, my husband is 72 and still working full time but now has no cover through his super fund and his private accident insurance with a well known insurance company expires when he turns 75, with all the encouragement from the government for seniors to keep working if they want to and still able to, why does insurance still cut out at the ages that it does, it should be an individual choice not applied for the convenience of the insurance companies

 

[Subduedshilo]

I have no faith in these so called insurance funds within your Super. When I was diagnosed with terminal Cancer I reached out to my super fund only to be told that I could not claim anything unless end of life was expected with 12 months. Needless to say I no longer have insurance in my super fund.
Be aware that it the same when you apply for a disability pension. The mountain of paperwork that is required is ridiculous only to be told that you need to die within 12 mths to get it.

Go figure. You work hard to get somewhere in life and get no help but if you do a stint as a Pollie (even sleeping on the job when parliament is in session- and yes, it happens a lot) you get everything handed to you on a silver platter.
my faith in both is a huge ‘Diddly Squat!!’