Changes to insurance within super for low balance accounts and for new members under 25

The government has introduced additional rules to insurance within super as part of new legislation called Putting Members’ Interests First. The rules aim to protect young members and members with small balances from having their super accounts eroded by fees for insurance cover that they might not be aware of or may not need, giving members’ super the best chance to grow.  

From 1 April 2020, super funds will no longer be able to offer insurance automatically to new members if any of the below applies: 

  • the new member is under 25 years old;
  • the account balance for the new member is less than $6,000.

For existing super members, irrespective of their age, the new rules mean insurance will be cancelled if they have a super balance below $6,0001 unless:

  • their balance reached $6,000 at any point from 1 November 2019 and before 1 April 2020,

or

  • members have 'opted in' to keep their cover before 1 April 2020, due to low balance,

or

  • members have ‘opted in’ to keep their cover before 1 November 2019, due to their super account being ‘inactive’. Inactive means no contributions or rollovers have been received in a super account for a continuous period of 16 months. 

Any existing members with super balances above $6,000 on 1 November 2019 are not impacted. 

How do I know if my insurance within super is impacted by the new rules?

The new legislation may impact existing super members2 with low balance accounts who have insurance in super, as well as new members who join a super fund from 1 April 2020. 

1. Members who opened a super fund account before 1 November 2019

If you’re an existing super member with insurance in super and your account balance is less than $6,000 on 1 November 2019, we’ll notify you and give you options how to maintain your cover if you wish.

  • You can 'opt in' to keep your insurance which means your cover will be maintained, irrespective of your account balance.
  • If your super account balance reaches $6,000 on any day between 1 November 2019 and 31 March 2020 then your insurance cover will be maintained and you don’t have to do anything, even if your balance drops below $6,000 at a later stage3.

Please note

You may not be impacted by the new rules if:

  • you opted in prior to 1 No­vem­ber 2019 to keep your in­sur­ance, in re­la­tion to our pre­vi­ous com­mu­ni­ca­tion about your su­per ac­count be­ing in­ac­tive. 
  • you actively applied for the insurance cover in your super and it was not automatically added to your super when you opened your account. 

2. Members who open a new super account between 1 November 2019 and 31 March 2020

If you open a new su­per ac­count be­tween 1 No­vem­ber 2019 and 31 March 2020 you may need to take ac­tion and opt in if you wish to keep in­sur­ance cover on your ac­count, as your ac­count bal­ance will be be­low $6,000 when you join. In this case we’ll no­tify you and let you know about the op­tions you have.

  • You can ‘opt in’ to keep your insurance which means your cover will be maintained, irrespective of your account balance.
  • If your super account balance reaches $6,000 on any day between the date you joined the fund and 31 March 2020 then your insurance cover will be maintained and you don’t have to do anything, even if your balance drops below $6,000 at a later stage.

3. Members who will open a super account from 1 April 2020

If you’re a new member who opens a super account from 1 April 2020, insurance cannot be provided automatically if any of the following criteria applies to you when you join:

  • You're under 25 years old;
  • Your account balance is less than $6,000.

You may need to take action and opt in if you wish to add insurance cover to your account when joining. You may also be eligible for automatic insurance cover once you meet these above conditions.

Opt-in requirements for members with insurance through super

The below table shows a summary of opt-in requirements for members with insurance through super who have a low super balance:

Super Insurance for low super balance

^ Excluding members who have insurance paid in full by their employer
* Members who join a super fund from 1 April 2020 and who wish to add insurance through super
** Any members who opened a super account before 1 April 2020 with insurance through super
*** excluding any members who have ‘opted in’ to keep their cover before 1 November 2019, due to their super account being ‘inactive’.

Insurance premiums paid for by your employer

You may have an arrangement with your employer, where the employer pays the full cost of your insurance premiums by making additional contributions on your behalf. In this case you don’t have to do anything to keep this particular insurance cover. This applies to existing members, as well as (any) new members who join a super fund, where the employer pays the cost of their insurance, irrespective of the member's super balance or the member's age. 

Please note: Additional changes to super legislation regarding inactive super accounts came into effect in July 2019 which may also impact the insurance cover you have in your super account. Learn more about these additional changes.

How do I know what insurance cover I currently have in my BT account?

It’s important you understand the insurance in your super account, including the type and amount of cover you have, and the premiums you’re paying. To view your insurance details, log into your online account, or speak to your financial adviser if you have one. Or call us and we can help. 

Should I keep my cover?

Everyone’s circumstances are different – so the decision to keep your insurance will depend on your personal and financial situation. We think insurance and retirement savings are both important. But it’s important to understand that the cost of the premiums for insurance through your super can reduce the amount of money available to you in retirement – particularly if you have cover through multiple super accounts or insurance cover outside super.  

When reviewing your insurance cover you may want to consider a number of things, which may include;

  • if you have other insurance cover elsewhere;
  • the types of insurance you currently have and whether you have the right amount of cover, and
  • the insurance premiums you are currently paying.

You can also refer to the ASIC MoneySmart website at moneysmart.gov.au for more information on insurance through super and insurance calculators.

Questions?

Haven’t found the information you’re looking for? Have a look through our frequently asked questions, and if you can’t find the answer to your question, call us on 1800 998 185. 

How do I know if my existing insurance will be cancelled under the new rules?

If your super account has a balance of less than $6,000 on 1 November 2019, and you have never previously made an election to take out or maintain your cover, your insurance through super may be cancelled from 1 April 2020. If this applies to you we will be in touch (by let­ter or email) by the end of November 2019 to let you know your options if you wish to keep your cover.

  • You can ‘opt in’ to keep your insurance which means your cover will be maintained, irrespective of your account balance.
  • If your account balance reaches $6,000 on any day between 1 November 2019 and 31 March 2020, your insurance cover will be maintained and you don’t have to do anything, even if your balance drops below $6,000 at a later stage.

I opted in earlier this year to keep my insurance because my super account had become inactive. Do I have to opt in again?

If you received a notification from us earlier this year, advising that your account hasn’t received any contributions or rollovers for a period of time, and you opted in to keep your insurance before 1 November 2019, you do not have to opt in again and you won’t receive an additional notification from us. Your insurance cover will be maintained even if your account balance is less than $6,000 at 1 November 2019.

If you opted in after 1 November 2019 due to your super account being inactive, or you never opted in before, you will have to take additional action if your super balance is below $6,000 and you wish to keep your insurance cover. In this case we will send you a notification and let you know your options if you wish to keep your cover by the end of November 2019.

Can I boost my super to reach the $6,000 limit?

If your super account is eligible to receive contributions then you may be able to make additional contributions to increase your account balance to $6,000 before 1 April 2020. In this case your insurance cover will be maintained, even if your balance drops below $6,000 at a later stage. Please ensure that you monitor your contribution caps, and make sure any contributions made are sufficient to cover any fees/deductions coming out of your account. 

My employer pays for my insurance through super. Do I still need to opt in to keep my cover?

If your employer makes additional contributions to cover the full cost of your insurance premiums, and they notify us about this arrangement, you will be able to maintain your insurance cover while this arrangement is in place. However, if your super balance is below $6,000 you may still want to opt in to protect this cover in case you leave the employer, or your employer ceases paying your insurance premiums. 

If I opt in to keep my insurance because my super balance is below $6,000, do I need to opt in again if my account becomes inactive in the future?

If you tell us you want to keep your insurance because your account balance is below $6,000, then your insurance may still be cancelled if your super account becomes inactive in the future. We will notify you in advance and let you know about your options if you wish to keep your insurance.

1. Under the government’s Putting Members’ Interests First changes, from 1 April 2020 insurance through super cannot be provided to a member if their super account balance has never reached $6,000 since 1 November 2019 if the member has not opted in to keep their cover.
2. Existing super member means any member that began to hold a super account prior to 1 April 2020, including those that acquired a product with insurance from 1 November 2019 onwards.
3.  Insurance may cancel before this date if you elect to cancel your cover voluntarily, or because there are insufficient funds in the account to pay insurance premiums, or if your super account becomes ‘inactive’ for a continuous period of 16 months, and you have not opted in to retain your cover in this circumstance.  Inactive means no contributions or rollovers have been received in respect of a super account. 

Helpful links

  • For more information on the government’s ‘Protecting Your Super’ changes go to moneysmart.gov.au.

  • For more information on concessional contributions refer to ato.gov.au.