WesTrac Memorandum From: Jarvas Croome; Greg Graham To: WesTrac All Date: 27 November 2015 Cc: Brian Pereira Dear All, IMPORTANT CHANGES TO INCOME PROTECTION INSURANCE Recently we engaged in a period of employee consultation regarding important changes to our Income Protection (IP) scheme which is set to expire on December 1 st, 2015. Unfortunately, in the current market, WesTrac s current IP scheme is an outlier from the perspective of both general industry practice and the appetite of insurance providers to offer this kind of policy. As such, we have seen pricing for our policy increase significantly over recent years, to the point where it is now being discontinued by most major insurance firms. We would like to thank all employees who took the time to submit constructive feedback regarding these changes. In total we received over 100 submissions via the consultation process and we have discussed this feedback with our insurance brokers when considering our options moving forwards. We have now sought quotes from all providers in the market as part of a comprehensive tender process and we wish to advise you that we have selected a new IP policy aligned with standard industry practice. A summary of the new policy is outlined below but for a detailed set of terms and conditions please contact Super Advice Services (details overleaf): Benefits Payment of 60% of your annual salary (based on your total annual reward for the prior year/12 months excluding Super); Waiting period of 90 days; Benefit period of up to 2 years; and If you are working in a part-time capacity, your salary would be pro-rated to reflect your part-time working arrangements. Eligibility WesTrac permanent salaried employees; Fixed Project and fixed term employees who have an entitlement stated in their contract of employment. Provider CommInsure 1
For the avoidance of doubt, this salary continuance policy will cover employees who are injured or fall ill outside of work (ie. this scheme will cover you for injury, accidents or illness which fall outside of normal workplace injury insurance cover). Employees are still fully covered for work related injuries. The scheme will now also be extended to cover employees who are on Fixed Term Contracts. Attached to this correspondence is a set of Frequently Asked Questions to help employees understand these changes and make informed decisions about their personal Income Protection plans. Based on our existing claims history the new scheme was assessed as the most appropriate level of cover for our business and more than sufficient for a majority of our requirements. We value the wellbeing of our employees and are committed to maintaining this insurance benefit for eligible employees. Managers and members of the HR team are available for questions should you wish to clarify any of this information or discuss Income Protection insurance further. As always we ask that you continue to focus your energies on staying safe, filling workshops and providing exceptional service to our customers. Yours sincerely, Jarvas Croome CE WesTrac WA Greg Graham CE WesTrac NSW/ACT FOR MORE INFORMATION RELATING TO OUR INCOME PROTECTION SCHEME PLEASE CONTACT SUPER ADVICE SERVICES: Anthony Warman or Jasmin Jakupovic in Western Australia on (08) 6380 3205; or Will Cummins in New South Wales on (02) 8234 0412. 2
WESTRAC INCOME PROTECTION INSURANCE FREQUENTLY ASKED QUESTIONS What is Income Protection Insurance? Income protection insurance is a form of insurance provided in the event that an eligible employee becomes permanently or temporarily disabled through accident or illness and this affects their ability to earn an income. How is Income Protection Insurance different to WorkCover? Income protection insurance covers eligible employees for accidents or illness which occur outside of work (ie. during non-work hours). It is separate to WorkCover insurance which is a legal requirement covering employees for injuries which occur at work. What is included in the calculation of the 60% benefit cover? The 60% is calculated based on your total annual reward for the prior year/12 months excluding Super. That means your base salary, overtime and any bonus or commission payments you received in the year prior to your accident or illness will be taken into account when calculating the 60%. Does the 60% include or exclude Superannuation? The 60% excludes Superannuation. How long after the 90 day waiting period, will the first payment under the policy be made? Payment under the policy is made 30 days in arrears so, including 3-4 days processing, first payment will be made on approximately day 124 after incident or illness for coverage from day 91. If I were to leave WesTrac, can I choose to continue the policy (at my cost) with no requirement for medicals? Yes, if you leave the business and wish to continue the insurance you can do so without taking a new medical but only if you are leaving to go to another job as the policy is to cover an income. If I continue the policy after I leave WesTrac, can I salary sacrifice the premium payable? The premium payable is tax deductible so has the same effect as salary sacrificing. What if I am off work and being paid income protection when a pay increase comes into effect for my role, will I receive an increase in my payment? No, the payment you receive for up to 2 years under the policy is based on 60% of your last annual income from WesTrac (excl Super). Does the policy include death cover? No, it does not. However, most superannuation funds include a life insurance policy so you should check with your superannuation fund provider. 3
Does the policy cover me for travel to and from work? Yes, but travel to and from work is also covered under a separate journey insurance policy that WesTrac maintains. What are the key terms of the new policy? A one page summary of the key terms of the policy are attached to this correspondence and can be accessed via the Super Advice Services website: <http://wp.super-advice.com.au/westrac> Can you outline what the terms are for total and permanent disability insurance that is included in the Westrac Superannuation fund? WesTrac s default superannuation fund is provided by AMP. For those employees that are in this fund, we have included a summary of the terms of this policy on our website with Super Advice Services <http://wp.super-advice.com.au/westrac>. For those employees who may belong to a different superannuation fund, please check with your superannuation fund provider regarding the terms of their policy. Does the new scheme provide the same level of protection as the existing policy? No, it doesn t. However, while the coverage levels contained in the new IP scheme are lower than what our existing policy allows for, WesTrac s claims history suggests that on average over 95% of employees are able to return to work within 2 years of their injury or illness. This suggests that while the scheme provides shorter salary continuance benefits, it will be more than sufficient for a majority of our requirements. What if I already have an illness or injury but haven t claimed? Am I covered under the old policy or the new policy? In most cases employees with pre diagnosed conditions are still covered by the existing policy. Employees who have been diagnosed with an illness which will result in time off work, have an injury which is keeping them off work, or a pending operation which is booked after December 1 st 2015 should contact Fiona Brown from WA HR team on (08) 9377 9778 and Belinda Boon from NSW Safety Team on (02) 4964 5271 to discuss details of a potential claim. Can I extend the new coverage to include additional benefits at my own cost? Yes, WesTrac is currently working with a number of suppliers in an attempt to secure discounted personal Income Protection insurance for those employees wishing to extend their coverage beyond the two years. We have engaged the services of Super Advice Services to provide you with free information on how you can increase your personal coverage and would encourage anyone wishing to discuss their options to call: Anthony Warman or Jasmin Jakupovic in Western Australia on (08) 6380 3205; or Will Cummins in New South Wales on (02) 8234 0412. Superannuation funds also provide income protection insurance should you wish to contact your superannuation provider. 4
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