Personal super insurance changes Adviser Q&A

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1 Personal super insurance changes Adviser Q&A What is happening? During 2010/2011, IOOF negotiated new insurance terms and conditions with the Insurer of the IOOF Portfolio Service Superannuation Fund, TAL Life Limited (formerly TOWER Australia Limited). As a result, various changes are occurring to the insurance cover available to through IOOF. When are the changes effective? The changes detailed in this Q&A will apply to new members from 15 July 2011 and existing members who apply for new cover, or an increase in existing cover, on or after 15 July Where members had, or applied for, insurance cover prior to this date, the changes detailed below will apply from 1 December Where a member requests a decrease in cover, the premium and terms and conditions relating to the cover will remain unchanged until 1 December What are the changes? The changes detailed in the following pages include: Enhancements to group life and income protection insurance: New premium rates and occupational loadings. 2 Extension of entry age for both death and death and Total & Permanent Disablement (TPD) cover. Extension of expiry ages for both death and death and TPD cover. Introduction of TPD definition for members aged Automatic reduction of TPD benefit will now start from age 71. New features and benefits additional options for increasing existing cover: Life events cover. 4 Adjusting income protection with salary increase 5 Which platforms are affected? The enhancements to group life and income protection insurance and the new features and benefits apply to: Pursuit Select Personal Superannuation Pursuit Core Personal Superannuation IOOF Portfolio Service Personal Superannuation LifeTrack Personal Superannuation Bendigo Financial Solutions Personal Superannuation Financial Partnership Portfolio Service Personal Superannuation. The service enhancements apply to all advisers on all IOOF platforms. How do members access the new life cover and income projection adjustment benefits? Members can apply to increase cover under these new features by completing the application form available from our web site ( or by contacting our adviser services team on Members with existing cover as at 15 July 2011 cannot access these features until after 1 December 2011 Does this mean PDSs for affected products are being replaced? No for Pursuit Select, Pursuit Core and the IOOF Portfolio Service Personal Superannuation products, the relevant insurance factsheet will be updated to reflect the new policies and features. In addition, the updated information for the relevant PDS, which is available from our website ( will be updated to note the various extensions to entry and expiry ages. For products which are closed to new members (such as LifeTrack Personal Superannuation), stand-alone booklets (which provide the same information as the insurance factsheet) containing an application form will be made available via the relevant Documents and forms page. Service enhancements: Online applications. 6 Tele-Interviews. 6 Underwriting tracking. 6 1

2 How will members know about these changes? Members who apply for cover on or after 15 July 2011 will have access to the revised factsheets and information sheets via our website. Members with existing insurance cover, or who applied for cover prior to 15 July 2011, will receive notification of their revised premium or level of cover (where they have selected a fixed premium benefit design) via their annual member statement. Remember, these changes are not effective until 1 December In addition, the Product News from the Trustee flyer included in the annual statement pack will provide details of the new features to all existing members regardless of whether they currently have insurance cover. What about the insurance premium calculator on Portfolio Online? This calculator will quote using the new premium rates and occupational classification loadings from 15 July Unfortunately this means the calculator won t return the correct quote for members who have existing cover and request a decrease in cover prior to 1 December You should contact our adviser services team on if you wish to obtain a quote for these clients. What is IOOF doing to help manage these changes? All documentation for new members will be updated on the IOOF corporate website ( on 15 July Your IOOF Business Development Manager is available to answer any questions you might have and to help you through the changes. Premium rates and occupational loadings The new premium curve and occupational loadings are better shaped for the majority of Fund members following benchmarking against peers in the premium platform space. Where can you see the new premium rates? You can see the new premium rate tables on the personal super premium rate factors and premium rates information sheet available from the Documents and forms page for each personal super product at our website ( These information sheets include the maximum % adviser commission in the premium rates. Will premiums go up or down? Member premiums may increase or decrease depending upon their age, occupational classification and smoking status. Are there new occupational classification loadings? The occupational loading classifications have changed following industry benchmarking and having regard for the composition of members within the Fund. The revised loadings are in the table below. Occupation Classification Existing occupational loading Revised occupational loading Death Death & TPD Income Protection Death Death & TPD Income Protection Professional White collar Light blue collar Heavy blue collar (skilled) Heavy blue collar (unskilled) How does this compete with others? We have used both the SuperRatings and Rice Warner product benchmarking software to produce a comparison of our premium rates with nine selected competitors. Your Business Development Manager can present this information to you simply contact them to make an appointment. 2

3 Extension of entry age for death and TPD cover The age at which members can apply for new death and TPD cover through their personal super account has been extended. What is the new entry age? The new versus revised entry ages are listed below: Previous entry age Revised entry age Extension of expiry ages The age at which existing death or death and TPD cover through personal super accounts ceases to apply has been extended. This means any cover members have in place will now continue until the new expiry age. What are the new expiry ages? The new versus revised expiry ages are listed below: Cover type Previous expiry age Revised expiry age Death Death and TPD TPD definition for Fund members aged of Fund members holding TPD cover between ages 65 to 75 must satisfy either Part A or Part C of the TPD definition to make a claim for TPD. This is a narrower definition of TPD than that which applies for members under age 65. What is the full TPD definition? You can view the full TPD definition in the relevant factsheet, PDS or insurance booklet for each personal superannuation product. These are available from our website ( or by calling our adviser services team on Automatic reduction of TPD benefit The automatic reduction in TPD benefit now commences from age 71 (previously commenced from age 61) which aligns with the extended expiry age of 75. How can these changes help advisers? These changes are of great value to advisers as they provide opportunities to manage your clients insurance cover further into the transition from full-time to part-time work or retirement. Advisers can ensure adequate cover remains to cover remaining mortgages and other similar liabilities. How did the reductions work previously? Where Fund members had TPD cover which did not decrease as they got older (for example, a fixed sum insured), TPD cover reduced annually by 20% on 1 July of the year the member s age next birthday was 62. For example if someone held $250,000 cover in both Death and TPD: As at 1 July, member age next birthday Death benefit TPD benefit 62 $250,000 (100%) $200,000 (80%) 6 $250,000 (100%) $150,000 (60%) 64 $250,000 (100%) $100,000 (40%) 65 $250,000 (100%) $50,000 (20%) 66* to 70 $250,000 (100%) Nil 71* Nil Nil *TPD cover ceases on the member s 65th birthday, and death cover ceases on the member s 70th birthday. How do the reductions work now? Following implementation of the changes, the automatic 20% reduction in TPD cover will not commence until the member s age next birthday on 1 July is 72. For example if someone held $250,000 cover for Death and TPD: As at 1 July, member age next birthday Death Benefit TPD Benefit 72 $250,000 (100%) $200,000 (80%) 7 $250,000 (100%) $150,000 (60%) 74 $250,000 (100%) $100,000 (40%) 75 $250,000 (100%) $50,000 (20%) 76* Nil Nil * Both Death and TPD cover cease on the member s 75th birthday.

4 Where TPD cover has already commenced tapering under the process outlined above (however has not yet expired), any remaining TPD cover will stop tapering until, as at 1 July, the member s age next birthday is 72. At this point, the remaining TPD cover will commence tapering at a rate of 20% each year until expiry at age 75. Do you have an example? Pete had $250,000 of death and TPD cover which had started automatically reducing. As at 1 July 2011, Pete was aged 64 next birthday with $250,000 of Death cover and $100,000 of TPD cover remaining. On 1 July 2012, there will be no reduction in Pete s TPD cover. His remaining cover will remain in place until 1 July 2019 at which point he will be aged 72 next birthday and his $100,000 of remaining TPD cover will start automatically reducing as follows: As at 1 July, Pete s age at his next birthday Death benefit TPD benefit 72 (2019) $250,000 (100%) $80,000 (80%) 7 (2020) $250,000 (100%) $60,000 (60%) 74 (2021) $250,000 (100%) $40,000 (40%) 75 (2022) $250,000 (100%) $20,000 (20%) 76 (202) Nil Nil New features and benefits In addition to the benefit of the extended entry and expiry ages, the Trustee has also negotiated two new features which allow the members to increase their existing level of cover without completing an extensive process of insurance underwriting (subject to the conditions summarised below). The features are: life events cover increases adjusting income protection cover with salary increase. How can the changes help advisers? These changes are of great value to advisers as they provide opportunities to manage their clients changing insurance needs as key events in their lives occur. The simple paperwork required to request an increase in cover under these features significantly decreases the likelihood of an application for increase not being completed through reducing the work required by advisers and clients alike. Life events cover increases What is life events cover? Members can apply for an increase to their death, death and TPD or income protection cover if one of the following life events occurs to the member: Marriage. The birth of a child. The adoption of a child by a member. The member s dependant child starts secondary school. Divorce. The member takes out a mortgage on the purchase of their primary place of residence (either alone or jointly with another person). The member increases their existing mortgage for building or renovating their primary place of residence. What is needed to apply for life events cover? Members may apply for an increase of cover only once in any 12 month period. To apply for this increase in cover, they need to: submit the application to us within 90 days of the life event or 0 days from the date of the annual member statement following the life event, and provide us with satisfactory evidence of the occurrence of the life event within the required timeframe. How much does life events cover increase my client s benefits? For death only or death and TPD cover, the maximum increase for each life event application should be the lesser of the following: 25 per cent increase from the existing cover the total amount or amount of increase of the mortgage you are taking out (where applicable) $200,000. The total level of cover after the increase can be no more than $,000,000. For income protection cover, the maximum increase for each life events cover application should be the lesser of: $2,500 per month 25 per cent increase from the existing cover. 4

5 The total level of cover after the increase will be the lesser of the following: $25,000 per month the selected insured percentage or 75 per cent of the member s earned income (as defined in the relevant PDS or Insurance Fact Sheet), plus superannuation contribution benefit of up to 10 per cent of the earned income (if the member has selected this cover). When are members not eligible for life events cover? Members are not eligible for a life events cover increase if any of the following applies to them: The insurer does not receive evidence of the occurrence of life events satisfactory to the insurer. Their insured benefit has increased during the previous 12 months. Their insured benefit following the increase will exceed the maximum benefit allowed. In any 12 month period, the amount of benefit increase exceeds 25 per cent of insured benefit before the benefit increase. They have applied for an increase of cover during the previous 12 months. They have had an application for death, death and TPD or income protection cover declined or had a loading, limitation or exclusion added. They have been diagnosed with, or are suffering from an illness, that reduces their life expectancy to less than 12 months or may cause a terminal illness (as defined in the relevant PDS or Insurance Fact Sheet) or permanent inability to work. They are above age 60. They are engaged in a hazardous occupation. They are not at work on the commencement date of the cover increase, and are unable to perform their full and normal duties on a full-time basis (for at least 0 hours per week) even though their actual employment may be full-time, part-time or casual. They have made, or are entitled to make, a claim for any injury or illness through workers compensation, sickness benefit, invalid pension or any insurance policy providing total & permanent disablement cover, accident or sickness cover. An application for life events cover may be accepted or rejected by the Insurer. Life events cover increase will not be payable if a claim arises from suicide or an intentional self-inflicted act or Injury within the first 1 months of the commencement date. Members may be eligible for interim accident cover in relation to their life events cover increase application. Adjusting income protection cover with salary increase What is adjusting income protection with salary? If a member s salary is increased by their employer, they may apply for an increase of income protection cover within 60 days of the effective date of the salary increase. When they apply, they must provide us proof of their new salary, the effective date, and the amount of salary increase. What conditions apply? An application for an increase in cover may be accepted or rejected by the Insurer based on the member s application. The Insurer may agree to increase their income protection cover without underwriting, if they meet all of the following conditions: The insurer receives evidence of their salary increase satisfactory to the insurer. The insured benefit has not increased during the previous 12 months. The insured benefit following the increase will be the lesser of the following: $25,000 per month the member s selected percentage or 75 per cent of earned income (as defined in the relevant PDS or Insurance Fact Sheet), whichever is the lesser, plus superannuation contribution benefit of up to 10 per cent of earned income (if the member has selected this cover). In any 12 month period, the maximum amount of benefit increase should be the lesser of: $2,500 per month 25 per cent increase from the existing cover. They are at work on the date the increased cover commences, and are able to perform their full and normal duties on a fulltime basis (for at least 0 hours per week) even though their actual employment may be full-time, part-time or casual. They have not had any increase of cover during the previous 12 months. They have not been diagnosed with, or are not suffering from, an illness that reduces their life expectancy to less than 12 months or may cause terminal illness or permanent inability to work. The member has not had an application for death, death and TPD or income protection cover declined or been offered a cover on alternative terms. They are age 60 or under age 60. They are not engaged in a hazardous occupation. 5

6 They have never made, and ar e not entitled to make, a claim for any Injury or sickness through workers compensation, sickness benefit, invalid pension or any insurance policy providing total & permanent disablement cover, accident or sickness cover. Service enhancements IOOF and TAL Life Limited have enhanced some of our services, making it easier to insure your clients. These changes include: online applications tele-interviews underwriting tracking. What are online applications and how will they help advisers? TAL have now created online applications, which means you can log on and type in your clients details. You can complete the application with your client sitting next to you. This reduces any confusion, as they can ask you questions directly and you can delve into any issues they might have. The new applications also have a reduced number of reflexive questions, from 45 down to 15. This will save you and your clients time as you go through the application form. What is underwriting tracking and how will it help advisers? You are now able to track your client s underwriting online, in real time. This means you will always be up to date on their application status. How are these new enhancements accessed? These new insurance enhancements are accessible online. Simply go to: Log into Portfolio Online ( Click on the insurance tab and then go to TAL s UWPlus Adviser Office To begin an application, click on the insurance online tab and then: online application tele-interview amend/resume. For tracking click on: underwriting tracking claims tracking. Paper applications are still available. What are tele-interviews and how will they help advisers? TAL can complete a tele-interview with your clients. They complete the application over the phone with the member, at their preferred day and time. Afterwards you will be notified of the outcomes and any further underwriting requirements (if applicable). Your clients get the best cover they can, as the TAL tele-interview staff are professionals in insurance. It also saves you time as the application will be completed for you. You may also prefer this approach if either you or your client feels uncomfortable discussing the client s personal medical history. Issued by IOOF Investment Management Limited ABN , AFS Licence No (IOOF) as Trustee of the IOOF Portfolio Service Superannuation Fund ABN IOOF Is a company within the IOOF Group of companies (IOOF group) which consists of IOOF Holdings Limited (ABN ) and its related bodies corporate. This document is intended for financial adviser use only and contains general advice which does not take into account your or your clients financial circumstances, needs or objectives. You and your clients should consider the appropriateness of the information having regard to your or your clients own circumstances. Before making an investment decision a copy of the relevant Product Disclosure Statement available from our website ( should be obtained and considered. Insurer: TAL Life Limited (TAL) ABN AFSL (formerly Tower Australia Limited). Group Life Insurance cover is provided under policies issued by TAL to IOOF as Trustee and not directly to individual members. If there is any inconsistency between this document and the Product Disclosure Statement or Policy Document, the terms of the Policy Document will prevail to the extent of the inconsistency. PLA