How To Change Your Insurance To A Mine Safety Insurance Policy

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1 <Date month year> <Name> <Street address 1> <Street address 2> <City State Postcode> Member number: <member number> Important changes to your insurance Dear <First Name> One of the benefits of your AUSCOAL Super account is the Income Protection (IP) cover you currently hold. To make sure your cover stays competitive, we regularly work with the insurer to bring you the best possible balance of benefits and premiums. We introduced this insurance in March 2013 and have recently finished a review of the arrangements. As a result, we ll be making some changes to your insurance cover from 1 March This letter gives you the facts you need to know about the changes and how they ll affect you. What s IP insurance? IP insurance pays you a regular income if you re unable to work your normal hours due to a serious injury or illness. One of the benefits of your super account is you receive an amount of IP insurance cover without having to provide medical evidence 1. Holding insurance through your super means you ve got one less expense to worry about and you benefit from the tax advantages of super. Our group buying power gives you access to competitive premium discounts to help you insure your future easily and affordably. What s changing? Some of the features and benefits of your insurance are improving which has also resulted in your premiums increasing. All changes start from 1 March 2015 unless stated otherwise. We ve an IP Insurance Schedule on page 2 confirming your current IP arrangements, based on the information we have on file. Please check these details and consider if the arrangements are right for you. 1 This is known as your Automatic Cover. By having Automatic Cover in your super, you receive a certain amount of insurance without having to complete the underwriting process normally involved in applying for insurance. In some instances we may require medical evidence, although this is not required in the majority of cases This is a Significant Event Notice for the purposes of S.1017B of the Corporations Act CAN Page 1 of 7

2 Your income protection insurance Field 1 Field 2 Member number Field 3 Your insurance details as at 7 January Personal insurance details Details Smoking status Field 4 Job classification Field 5 It s important to tell us your job classification, as we use this information to work out the cost of your insurance. To update your job classification complete a Change my insurance form available at Income protection insurance Details Start date of insurance Field 6 Benefit amount Waiting period Benefit payment period Your salary Field 7 per month Field 8 days Field 9 years Field 10 per year Monthly cost Current New 2 Difference $Field 11 $Field 12 $Field 12 minus Field 11 2 New costs start from 1 March Cost estimate is current as at 7 January Things that can change this amount include having a birthday, your salary changing, changing occupations, or changing the waiting or benefit period of your policy This is a Significant Event Notice for the purposes of S.1017B of the Corporations Act CAN Page 2 of 7

3 1. Improved salary cover There has been some confusion regarding the definitions of salary, so we ve clarified and improved these. The new definition is far simpler and more generous, which means you could receive a larger benefit payment. The previous salary you were covered for was: Previous type Coal miners Previous salary description If you re paid an annual salary Your annual salary, including monthly incentives and bonuses, but not overtime, penalty rates and shift-loadings. If you re a full time employee paid a base rate of pay The greater of your base rate of pay including monthly incentives and bonuses or 75% of your base rate of pay, monthly incentives and bonuses, overtime, penalty rates and allowances (other than reimbursement of expenses). If you re a casual employee Your base rate of pay plus monthly incentives and bonuses. Base rates of pay are calculated before salary sacrifice amounts are deducted. This will be the same salary your employer reports to the Coal Mining Industry (Long Service Leave Funding) Corporation. Non miners The salary we ll use to calculate your income protection insurance will be your Ordinary Time Earnings (OTE). This is the salary your employer uses to calculate the 9.5% of your pay they are required to contribute to your super. Your OTE will generally be your wages earned, along with things like shift-loadings, commissions and some bonuses and allowances. It doesn t include overtime payments outside your ordinary hours. Your salary doesn t include the super contributions your employer pays for you. The new salary you re covered for is: New type Employed Self employed New salary description Your earnings before tax, or gross salary, from your employer(s) we have on file. This is your average salary earned in the 12 months before you became disabled, including actual bonuses and overtime earned. Your earnings before tax, or gross income, from your own efforts (personal exertion) minus relevant business expenses for the 12 months before you became disabled. For more information and salary examples visit This is a Significant Event Notice for the purposes of S.1017B of the Corporations Act CAN Page 3 of 7

4 2. Super payment increase In recent years, the compulsory super contributions your employer pays for you have increased. We have increased the super amount of your benefit payment also, to keep pace with this increase. This means you ll receive a larger total benefit claim payment and grow your super balance faster. Type Current amount New amount Difference Super contribution 9.0% 9.5% +0.5% 3. IP insurance cost increase Due to the range of improvements introduced in this review, IP cover costs are increasing. In addition, recently insurance companies have significantly increased the cost of insurance, or premiums, through super. This is due to industry wide increases in claims and rising costs for insurers. In fact, research shows that several major super funds have increased their insurance premiums by over 60%, with one increasing by over 140% 3. The increase for IP insurance through AUSCOAL Super is approximately 22%. At AUSCOAL Super, we are always disappointed to increase costs. We are pleased to have been able to keep the increase far lower than some others and will continue to provide you with the best balance of benefits and costs possible. How does this affect you? For the new insurance rates, specific to your account, please see the Insurance Schedule on page 2. To access a table showing the rates for all ages and genders, please visit Are premiums competitive? Yes. SuperRatings rated AUSCOAL Super as offering compelling value and competitive rates 4. We believe the premiums remain competitive, particularly for miners and associated roles who often struggle to secure enough affordable insurance. As a profit to members fund, we do not receive any benefits like commission from insurance premiums. Our group buying power gives us access to discounts which we pass on directly to you as competitive premiums. This helps you insure your future easily and affordably. All premiums are passed on directly to the insurer. Does this change affect any other insurance? No. This premium increase relates to IP cover only and doesn t affect any Death or Total and Permanent Disability (TPD) cover you hold through AUSCOAL Super. 3 The Group Insurance Market, Rice Warner, 3 December SuperRatings Benchmark Report 2013, page This is a Significant Event Notice for the purposes of S.1017B of the Corporations Act CAN Page 4 of 7

5 4. Cover improvements and existing conditions If you improve your cover 5, you won t be covered for existing conditions 6 on the improved or increased part of your insurance. This change means the system is now clearer and fairer for everyone. Previously, a person could be covered for existing injuries when they improved their insurance. With this change, the system is now fairer for everyone by preventing people from unfairly claiming a benefit they haven t paid for. If you were covered for an existing condition and improved your cover then your cover would remain the same for that particular condition. This rule doesn t apply to salary increases when they are: Made as part of a promotion or pay rise by your employer Normal variations, like overtime payments Any salary decreases won t affect your ability to claim for existing conditions. For more information and examples visit 5. Clarification of existing Policy Extension Option Your IP cover currently includes an option to extend the waiting period up to two years if you hold another IP policy with another insurer. This option means that you might be able to delay the start of your AUSCOAL Super IP benefit until your benefit payments stop on your other IP. Did you know the law says you can only use one IP policy at a time? If you have two IP policies and use this option, you re able to get some benefit where you would otherwise lose out. We ve now clarified that you need to apply for this option within: - 90 days of receiving your welcome letter; or - your existing 60 day waiting period, which begins when you become disabled. 5 Improving your cover means increasing your salary or benefit period, or reducing your waiting period, more than 60 days after your welcome letter. 6 Existing conditions means existing injuries and pre existing sicknesses as defined in the policy document This is a Significant Event Notice for the purposes of S.1017B of the Corporations Act CAN Page 5 of 7

6 6. Matching waiting period to sick leave Some employers are able to contractually require all sick leave to be used before going on unpaid leave 7. If your employer can do this, and your sick leave is longer than your waiting period, you can now extend your waiting period until your sick leave ends. Previously any sick leave taken had the potential of reducing your insurance payment amount, benefit period or both. This means you can now have comfort that sick leave you have to take won t negatively affect your IP benefit payments. Please consider that: This option is only available for members with a: o 60 day waiting period; and o Two year benefit period Waiting periods can be extended up to two years Extension requests must be received by us during your existing waiting period 7. Mining job classification now includes more high risk jobs Applies to Death, TPD and IP cover This change makes sure that premiums are right for certain high risk jobs. If we didn t do this, people in lower risk jobs would pay more because of higher risk ones being grouped in with them. We re currently working with our insurer to agree which high risk jobs will be placed under the Mining occupational classification. Once this is done, we ll let you know more about the change. 8. Classification clarification for professional and white collar workers Applies to Death, TPD and IP cover We have clarified that professional and white collar workers, who are underground more than 5% of their work time, have a Mining job classification. Previously there has been some confusion about which job classification these people should have. If you have previously changed your job classification to professional or white collar but you work more than 5% of your time underground you should contact us and let us know. You will need to change your job classification as if you don t you could have issues at claim time. Professional and white collar workers who spend less than 5% of their work time underground are not affected by this change. This clarifies previous confusion for some professional and white collar workers. 7 Means under a written contract like an employment contract This is a Significant Event Notice for the purposes of S.1017B of the Corporations Act CAN Page 6 of 7

7 Your questions answered Conditions before 1 March 2015 If you take out insurance and become disabled before these changes take effect, the current conditions will apply. This will be the case even if you lodge a claim after 1 March If you find yourself in this position, please contact us for help. What do you need to do? You do not need to do anything for these changes to happen. We ve included an IP Insurance Schedule on page 2 confirming your current IP arrangements, based on the information we have on file. Please check these details and consider if the arrangements are right for you. If you need to make changes, please complete a Change my insurance form available at For professional and white collar workers only If you have previously changed your job classification to professional or white collar but you work more than 5% of your time underground please complete a Change my insurance form available at This will make sure you re charged the correct premiums and reduce the risk of your claim being rejected or benefit being reduced at claim time. Want more information? You can get more information at This includes a table showing the premium rates for all ages and genders plus examples and case studies. Any change to your super arrangements, like these insurance changes, can have an effect on your super entitlements. An AUSCOAL Advice 8 financial adviser can help you understand the changes and decide if the new insurance arrangements suit you. If you have questions or concerns, please give us a call. We d be happy to talk you through the changes in more detail. Simply give us a call on 1300 AUSCOAL ( ), Monday to Friday, 8am to 6pm (AEST or AEDST when in operation) or enquiries@auscoal.com.au. Yours sincerely Bruce Watson CEO, AUSCOAL Super 8 AUSCOAL Advice is a trading name of AUSCOAL Services Pty Ltd ABN , a Corporate Authorised Representative of Adviser Network Pty Ltd ABN AFSL This is a Significant Event Notice for the purposes of S.1017B of the Corporations Act CAN Page 7 of 7