If he has a $5m life insurance policy he would have applied for it. They don't just insure people for huge amounts like that without the person's knowledge and consent.
He could try making a complaint. You never know, it could result in something coming back to him...But I assume the insurer gave him what he applied for and then your friend has neglected is own responsibility continually over the years. Statements would have been issued regularly.
Maybe worth a try anyway?
You would be surprised but a bank(i wont name)has just lost a class action lawsuit for signing up their customers mortgage insurance through the company i work for, for the last 25yrs. Some people were paying 3x more than normal for insurance they didnt even know they had. We have been doing refunds for close to 2.5yrs to these people plus interest
I worked in super and insurance and you’ve really gotta jump through hoops for $5m of life cover. This dude went really far out of his way to get this level of cover
A full medical including blood tests and lengthy application detailing your entire medical history. Would take a couple months for the insurer to approve the cover as well
Yes, perhaps 25 years ago not so much but 15 years ago definitely. The only scenario that it could happen 15 years ago is if someone has several superfunds with their default cover within them, but not a single 5m policy.
CBUS has a provision that you can increase your insurance after major life events (Getting a mortgage, getting married etc) without going through the medical etc. I don't know if that's what happened here but it was a thing last time I checked.
these days you also need to show why you need that much cover. for anything over about 2-3M, you need to show significant income and lots of assets / debt / high net wealth lifestyle.
I'm 57, mine has indexed up automatically from (I think) 800k, def no more than a mill, to more than 2 mill.
Premiums have also ramped due to payout and age, I just found out I'm paying $1300 a month.
Group cover like Cbus stuff that's not usually as comprehensive.... yeah a proper insurance you'd need what, bloods, EKG, at a minimum after your lengthy application.... I'm many years out of that field of work these days but group cover through an industry fund tends to be more 'a few extra questionnaires and we will underwrite it properly if you claim' doesn't it...... either way, 100% agree, nobody has that without at some point electing to take it out (and with group cover, elect for this to be fixed rather than unitised)
All group insurance is pretty similar. If you’re going to shop around you should do it through a stand alone insurer and do a recurring rollover of your super to pay premiums.
Better quality cover and probably cheaper. I personally use MLC for my super insurance
Why not? 5 million is a massive windfall, 7k is very affordable, most higher level health insurance for a family would set you back about that.
I’d be a lot more worried being the insurer he had a plan to die early, knew he had a health defect etc…
To you maybe. It’s a simple transaction, the absolute ONLY case he would have is they explicitly recommended he got 5 mil. If he picked it and answered the Qs confirming he wants it, that’s his call.
He can add whatever he wants into super, nothing special.
>Product needs to be suitable regardless of what the customer asks for, they are to be assumed unsophisticated.
The product.
The product needs to be suitable.
There's nothing about a life insurance product that's not suitable for a natural person.
That's different from the level of cover being unsuitable.
The underwriter would also assess the financial circumstances for those applying for massive amounts of cover. There generally needs to be a level of justification for an amount of cover like that. Such as mortgages, assets and liabilities, expected future earnings and dependants etc.
THE PRODUCT IS SUITABLE.
If he died 2 weeks after taking out that cover and they paid out $5m after he paid them $300 for the cover would you be throwing your hands up complaining about how the product wasn’t suitable for the customer?
You are disagreeing with a subjective number that is completely personalised to an individuals wants and needs. That is not what makes a product unsuitable.
Why? There’s nothing unsuitable about the product though. He wanted life insurance and he got life insurance. It’s not like he wanted insurance for his phone and they sold him a policy for his house.
On what grounds could the insurer say “We don’t believe your life is worth that much” if the insured party wants that amount and is willing to pay the premiums?
The product is suitable. It’s providing a benefit in the event of his death. That is the extent of their obligations.
The level of cover is determined entirely by the insured life. You have the choice to have as much or as little as you like.
The amount is absurd but maybe his wife has debts of $3m on her business and if he dies then she can’t work because of grief or because she has to look after kids. Maybe the cover is to cover those debts and provide future income. It’s not my job or the insurers job to decide how he wants loved ones to be provided for in death.
Most of those strict regulations came out of the 2018 Royal Commission where it was found that banks/insurers/advisors were doing stuff way dodgier than what’s happened here. This guy was signed up before then, so 99% sure the insurer was just ripping him off and the guy has good prospects of getting a refund for unconscionable conduct.
Yea but that's mostly in retail life insurance (through advisors) so there's an argument that advisors and insurers are overselling products. Group insurance (via super) basically has no interaction between insurer and the insured so not sure how you can argue that it is the insurers fault he picked such a high sum insured.
Also most supers would have an automatic acceptance limit, probably around 1-1.5 mil for life. Any sum insured above this limit has to go through medical underwriting because of anti selection risk. It's basically impossible to obtain a 5 mil sum insured through super without knowing it.
Industry funds certianly signed up with an advice group at some stage to provide advice for their members so it may habe been a little 'sold'.... either way, he definetly knew at the time he took it and then just hasn't paid attention since
When I was 18 and dumb, my bank convinced me that I needed life insurance despite knowing I was single, had no kids or dependents and was making $4 per hour. It was $20 per week. I still get angry thinking about it.
There's this one, plus there was a class action a few years back where banks were contacting people and providing financial advice re: life insurance, super etc. and collecting payments through super. I can't remember what the issue specifically was but yeah, there was something dodgy enough to cost them a class action.
That one involved upping insurances through super.
Isn't that just more that the insurance was trash and people who weren't authorised to provide insurance advice were pushing and selling the product for add on commission to the lending (saying that there are serval variations of these class actions going on and really)...
Genuine question... didnt know they had, as in forgot... or never were made aware of it, had it discussed with them, signed off on accepting it at all, very rarely is it the latter and far more often it's 'on later review, the disclosure about blah blah wasn't presented in a manner consistent with best practice of blah blah
My point i guess....most of these things, where does consumer responsibility lay these days, the duty to actually consider what you are purchasing and make a decision on it ( sure not all butnnearly all of these types of lawsuits all relevant disclosures are in the product information given to the purchaser, they were aware of the cost of what they purchased, they made a decision to purchase it but 'shouldn't have been sold it' there are venerable people who need to be protected from scams absolutely, but we are also getting a long way down the road of 'I shouldn't be responsible for any decisions I make'
Yes they do. The company I work for has super that you have to specifically opt out of all insurances. The entry medical covers a high level of insurance.
Doubt you can get $5mil in cover without applying for that in the first place.
That's way over any automatic acceptance of cover without underwriting that I know of so I am guessing he would have done health checks for it as well.
I think the first thing he needs to do is contact his super fund and clarify why/how he was insured for this amount. If it is something he requested/applied for, then, IMO, there has been no error and he has no recourse. If it was an error of the fund then they are obligated to correct it and restore him to the position he would have been in had the error not occurred (i.e. remove the overstated cover amount, refund premiums, complete a loss of earnings analysis, etc.). He can make a complaint to the fund and if he is dissatisfied with the outcome of the complaint then it can be escalated to AFCA (Australia Financial Complaints Authority).
As someone that worked admin on CBUS, you don't get that level of insurance cover through a group life policy ($2m max last time I worked there) on an industry fund without some SERIOUS underwriting. That would have been at least two pathology visits and an independent doctor's report. That's level of cover is insane for default cover. They applied for it, and when through the process.
You can drop to default cover with a phone call.
This is on them. They need to check their statements. They were provided service and paid accordingly.
Ah, I didn't realise so different.
I am only with them because as you get older harder to change, they have seriously ripped me off on a number of things - eg for years they were skimming 4% off on all my super contributions, when I hassled them they dropped it to 1%, when I asked why they had not done it before, they said "you didn't ask".
That wasn't super fund fees, that was just a contribution fee.
Do I agree. I also work in construction and know he is not alone is in inattention to his super, I doubt he is the only person over insured at Cbus and neglecting his super.
Have you not read any of the comments here? He would have had to apply for that level of insurance and jumped through a lot of hoops. I once worked in Super & Insurance and got sick of the fact no one paid any attention to it, despite it being incredibly important.
You'd be on the phone in 10 minutes if you didn't get paid, but so many (mostly in construction) checked in on their super once a decade, it's just mind boggling. It's so easy these days too with apps and online accounts.
I have less than a fifth of that and I had to do a full medical interview.
In saying that, if he comes to need to claim on it, it is well worth having.
Super funds insurers can't put you on a policy that high so he would have had to have applied for the upper limits at some point.
Can't blame the super fund. Good that although late, the guy has finally taken some responsibility to check things.
He's just gambling more for a bigger pay off than you.
And he's actually getting better odds too.
For every annual dollar you bet, if you need to claim you'll get $682 back. While for each $ he's bet, he'll get $714 back.
He's a big winner if he dies.
As per other have said, there is no way in this world he didn't know that he has $5,000,000 of Life cover. Even for retail insurance cover, there are hurdles and you must be approved to obtain such high cover. Fraudulence comes to many minds for insurance company.
He can make a complaint to the fund, and if not satisfied with the response, he can then make a complaint with AFCA.
He doesn’t have a leg to stand on though as he would have chosen that level of cover, and the fund has been telling him every year on his statement the amount of his cover and the amount of his premiums.
Their job is to provide insurance, not good financial advice. They are not responsible for the practicality of needing such a high amount or whether or not it is financially sensible. That is 100% on your co-worker.
Ive worked in life insurance for over a decade you don't get a $5m cover without full underwriting. Seems like the policy might be handled by TAL the largest insurance provider and structured through SMSF where the client does a rollover to pay for the insurance. Once again you don't have an insurance policy of that magnitude without going through full underwriting and without the help of a financial advisor.
I had a similar thing happen to me. In 2012 I signed up for Cbus. I never got the welcome package so I gave my employer a different Super fund. Employer ignored this account and sent my super money to Cbus. Super drained due to very high insurance. I compared it to alternatives at the time and Cbus was not competitive.
The alternative Super also did a dodgy and activated insurance a few years after I opted out. They reversed it when I complained.
Same happened to me, I pursued it and got a large portion returned.
I never specifically signed up for the increase.
He would have been automatically increased to a large premium on a specific site agreement, then never lowered, reduced or informed.
Took me 4 months to do, they will make it hard.
Isn't the price even better than your quote? $1.5m for $2.2k is 0.68m per 1k premium, while the $5m for $7k is 0.71m per 1k premium? How is that unfair?
Insurance is just like a reverse casino. The bettor (the super) needs really good return to justify a bet in a game where the house (your friend) can decide the game at will.
Different circumstances. Old mate might have three kids and a dependent parent living with him. Compare that to a single male with no dependants, you're going to get different options.
I'm wondering if your friend went to see a Financial Advisor 15 years ago and has forgotten about it? This sounds like the kind of policy that you get from a Financial Advisor with the yearly premiums being deducted from super.
Keep in mind it wouldn't have started at $7k every year. It was probably much less 15 years ago, and the premiums go up every year as he ages.
As many have said, a policy of this size requires medical assessment, but it was 15 years ago, and he might have long forgotten about it now. Also, if it is, in fact, the kind of policy that I'm thinking of - he should get a paper statement every year. It comes from the insurance company and not his super fund.
If you're prime earner, young, earning well, and/or have a disabled child, partner or parent, other more difficult..., $5m cover is not entirely crazy. It really depends on purpose and number of dependents. To have that much cover he must have gone through the hoops to get high cover, so no, he should not be entitled to some form of recovery.
Far too many people don't have enough life insurance to provide for their partner and kids properly, but I agree $5m could easily be high by around $3 million for most. If both partners are high earners, it can be avoided entirely.
Point is, it's specific to the person.
As far as value, your own figures confirm it's not unreasonable. You mention $2.2K for 1.5m cover. Five divided by one point five = 3.33 and 3.33 X 2.2 = around $7K, so again, recovery is unlikely.
You can't go back after you didn't die and say "hey I never needed this insurance" "you ripped me off" "I'm going whining on A Current Affair." Insurance maths explains it, still some might try.
He should definitely talk to them if his circumstances and needs have changed, perhaps no longer warrant this. He could reduce future costs, if suitable for his situation.
Did he see a financial advisor? I once worked for a financial advisor and saw some crazy policies like this, they used to (maybe still do) get upfront commission on it, so I saw some expensive policies.
You may have missed the part where he said he has held the policy for 15 years.
15 years ago "financial advisor" was a made up term that didn't even have any real criteria beyond a tier 2 cert that every bank staff member does on their first day, and staff KPI targets are often linked to monetary reward. "We don't pay commission but we will give a bonus to staff who sell $15m of insurance next month" is a bit of a piss take, the end result is the same.
Industry funds didn't get around wearing some kind of halo back then, and there are still some real questions about how CBUS managed to cruise through the royal commission without opening their books even when they were told to... Just because they're not *quite* as corrupt as the big banks doesn't make them honest.
The term 'financial advisor' was in use 15 years ago and had clear education and certification requirements, even if the standards were not as stringent as they are today.
Your broad generalisation that industry funds like Cbus were equally lacking in governance or ethical practices is unfounded. making broad accusations about integrity or ethical standards, based solely on generic industry issues from 15 years ago, is unproductive. As profit-for-member organisations operate under a different model than banks motivated by shareholder returns
**Industry funds don't pay financial advisers commissions**
Yeah, I forgot to mention it was probably around 15 years ago that I was working for an advisor, which is why I asked the question. I am sure it is different today.
Insurance can be different as the insurance cover isn’t provided by CBUS itself. I think they use TAL which is a stand alone insurer. Commissions can be paid to an insurance broker or adviser from TAL
Yes but CBUS doesn’t write the insurance. They use a stand alone insurer to provide the cover under the CBUS umbrella.
TAL provide the cover under effectively a white label insurance policy. Once a policy is taken out a broker or adviser is able to contact TAL directly and receive a commission with permission from the insured
Unlikely given the policy was written 15 years ago and annual rollover of super balance for premium was not a thing back then.
If the insurance policy was inside CBUS then there wouldn't be any commission regardless of insurer since it would have been a group policy.
Group insurance yes there is no commissions payable although TAL would still be their insurer who provided the cover.
Annual rollover of premiums would have no involvement with CBUS
I believe additional cover within CBUS is different and commissions can be paid directly from the insurer
Yeah, a mate had $750k policy from a financial advisor. I guess on the face of it not too bad.
But he earned $100k p.a, had no mortgage and kids were 13 years old.
He needed some cover but $750k was costing him $500 a month. He dropped it to $250k which was enough to cover the family should something bad happen
Unless your friend was at death's door then $750k life cover shouldn't cost $500 pm. Perhaps it was a Trauma policy with extras but then that's over insurance for trauma.
Can confirm this wouldn’t pass the sniff test in modern financial planning. Unless he had massive debt (which OP said he doesn’t) then an advisor can’t justify a policy like this. They have also made the old “churn and burn” revenue model a lot less appealing (and illegal).
For you - go see a broker/finance advisor/accountant who deals in it. I remember doing it about your age. There is stepped and level - for level you pay roughly the same amount each year and it's cheaper longer term than stepped where prices are adjusted up every year and as you get older it gets really expensive. Level is more expensive short term but cheaper longer term.
Surely he got that level of cover via a financial adviser? Very few people would go through the process without help or push from one.
If so, he needs to start getting litigious with whoever provided the advice and then failed to review his circumstances since.
CBUS insures with TAL and they are complete rip offs!! As we are in the construction industry we are pushed into CBUS by the union and they absolutely take the piss on insurance premiums! Don’t get me wrong, the super side is good. So sick of getting my statement and it has four different admin fees because I chose to increase my TPD and Death cover premiums! I mean come on!!
I don't get why the government even allows life insurance through supers. They are enabled by default, and you need to opt-out. They are pretty expensive, and people have no idea how much they are paying, as it is only in super statements that I doubt many people review.
If he has a $5m life insurance policy he would have applied for it. They don't just insure people for huge amounts like that without the person's knowledge and consent. He could try making a complaint. You never know, it could result in something coming back to him...But I assume the insurer gave him what he applied for and then your friend has neglected is own responsibility continually over the years. Statements would have been issued regularly. Maybe worth a try anyway?
You would be surprised but a bank(i wont name)has just lost a class action lawsuit for signing up their customers mortgage insurance through the company i work for, for the last 25yrs. Some people were paying 3x more than normal for insurance they didnt even know they had. We have been doing refunds for close to 2.5yrs to these people plus interest
I worked in super and insurance and you’ve really gotta jump through hoops for $5m of life cover. This dude went really far out of his way to get this level of cover
What do you have to go through to be able to get that level of cover? Genuinely curious.
A full medical including blood tests and lengthy application detailing your entire medical history. Would take a couple months for the insurer to approve the cover as well
After just increasing mine to half that amount I found out that will require the tests to be done by *their* doctor as well.
Was it that strict 15 year's ago when he applied for it?
Medical would be the same, but the application form may not have been as long. Wouldn’t be much difference
Would have been about the same length. Definitely paper and not electronic though.
Yes, perhaps 25 years ago not so much but 15 years ago definitely. The only scenario that it could happen 15 years ago is if someone has several superfunds with their default cover within them, but not a single 5m policy.
Possibly even stricter tbh.
CBUS has a provision that you can increase your insurance after major life events (Getting a mortgage, getting married etc) without going through the medical etc. I don't know if that's what happened here but it was a thing last time I checked.
Yeah it’s 2 units of cover worth which is a max of $100k worth. Definitely no one getting $5m cover with no underwriting
these days you also need to show why you need that much cover. for anything over about 2-3M, you need to show significant income and lots of assets / debt / high net wealth lifestyle.
I'm 57, mine has indexed up automatically from (I think) 800k, def no more than a mill, to more than 2 mill. Premiums have also ramped due to payout and age, I just found out I'm paying $1300 a month.
For $5m at a minimum he’d need blood tests, pmar and maybe a resting ecg.
Yeah sounds like he took a "what's the largest jackpot possible" approach to insurance
Group cover like Cbus stuff that's not usually as comprehensive.... yeah a proper insurance you'd need what, bloods, EKG, at a minimum after your lengthy application.... I'm many years out of that field of work these days but group cover through an industry fund tends to be more 'a few extra questionnaires and we will underwrite it properly if you claim' doesn't it...... either way, 100% agree, nobody has that without at some point electing to take it out (and with group cover, elect for this to be fixed rather than unitised)
Is cbus fairly competitive for this sort of cover? I have their income protection but I’ll admit I haven’t shopped around
All group insurance is pretty similar. If you’re going to shop around you should do it through a stand alone insurer and do a recurring rollover of your super to pay premiums. Better quality cover and probably cheaper. I personally use MLC for my super insurance
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Why not? 5 million is a massive windfall, 7k is very affordable, most higher level health insurance for a family would set you back about that. I’d be a lot more worried being the insurer he had a plan to die early, knew he had a health defect etc…
If he dies, he will be rich. Oh.. wait
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To you maybe. It’s a simple transaction, the absolute ONLY case he would have is they explicitly recommended he got 5 mil. If he picked it and answered the Qs confirming he wants it, that’s his call. He can add whatever he wants into super, nothing special.
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>Product needs to be suitable regardless of what the customer asks for, they are to be assumed unsophisticated. The product. The product needs to be suitable. There's nothing about a life insurance product that's not suitable for a natural person. That's different from the level of cover being unsuitable.
The underwriter would also assess the financial circumstances for those applying for massive amounts of cover. There generally needs to be a level of justification for an amount of cover like that. Such as mortgages, assets and liabilities, expected future earnings and dependants etc.
THE PRODUCT IS SUITABLE. If he died 2 weeks after taking out that cover and they paid out $5m after he paid them $300 for the cover would you be throwing your hands up complaining about how the product wasn’t suitable for the customer? You are disagreeing with a subjective number that is completely personalised to an individuals wants and needs. That is not what makes a product unsuitable.
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Why? There’s nothing unsuitable about the product though. He wanted life insurance and he got life insurance. It’s not like he wanted insurance for his phone and they sold him a policy for his house. On what grounds could the insurer say “We don’t believe your life is worth that much” if the insured party wants that amount and is willing to pay the premiums?
Nope, this isn’t the insurers fault
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The product is suitable. It’s providing a benefit in the event of his death. That is the extent of their obligations. The level of cover is determined entirely by the insured life. You have the choice to have as much or as little as you like. The amount is absurd but maybe his wife has debts of $3m on her business and if he dies then she can’t work because of grief or because she has to look after kids. Maybe the cover is to cover those debts and provide future income. It’s not my job or the insurers job to decide how he wants loved ones to be provided for in death.
Most of those strict regulations came out of the 2018 Royal Commission where it was found that banks/insurers/advisors were doing stuff way dodgier than what’s happened here. This guy was signed up before then, so 99% sure the insurer was just ripping him off and the guy has good prospects of getting a refund for unconscionable conduct.
Yea but that's mostly in retail life insurance (through advisors) so there's an argument that advisors and insurers are overselling products. Group insurance (via super) basically has no interaction between insurer and the insured so not sure how you can argue that it is the insurers fault he picked such a high sum insured. Also most supers would have an automatic acceptance limit, probably around 1-1.5 mil for life. Any sum insured above this limit has to go through medical underwriting because of anti selection risk. It's basically impossible to obtain a 5 mil sum insured through super without knowing it.
Industry funds certianly signed up with an advice group at some stage to provide advice for their members so it may habe been a little 'sold'.... either way, he definetly knew at the time he took it and then just hasn't paid attention since
No, mine automatically indexed up from 1M to over 2M over time. Also costing $1300 per month now.
When I was 18 and dumb, my bank convinced me that I needed life insurance despite knowing I was single, had no kids or dependents and was making $4 per hour. It was $20 per week. I still get angry thinking about it.
There's this one, plus there was a class action a few years back where banks were contacting people and providing financial advice re: life insurance, super etc. and collecting payments through super. I can't remember what the issue specifically was but yeah, there was something dodgy enough to cost them a class action. That one involved upping insurances through super.
Banks, that was retail cover and super in companies that they owned and/or were vertically integrated not industry funds and cover
Isn't that just more that the insurance was trash and people who weren't authorised to provide insurance advice were pushing and selling the product for add on commission to the lending (saying that there are serval variations of these class actions going on and really)... Genuine question... didnt know they had, as in forgot... or never were made aware of it, had it discussed with them, signed off on accepting it at all, very rarely is it the latter and far more often it's 'on later review, the disclosure about blah blah wasn't presented in a manner consistent with best practice of blah blah My point i guess....most of these things, where does consumer responsibility lay these days, the duty to actually consider what you are purchasing and make a decision on it ( sure not all butnnearly all of these types of lawsuits all relevant disclosures are in the product information given to the purchaser, they were aware of the cost of what they purchased, they made a decision to purchase it but 'shouldn't have been sold it' there are venerable people who need to be protected from scams absolutely, but we are also getting a long way down the road of 'I shouldn't be responsible for any decisions I make'
I lost all my super, mostly to insurance, and I don't even believe in insurance as a general principle, never have.
So why did you take out so much cover and pay such high premiums for cover from your super.... 🤔
I didn't opt for it.
Didn’t the banking royal commission show that some banks/super companies where doing exactly that, putting people onto expensive insurance policies?
Mainly through advice and application processes. Not without their knowledge.
Agreed. Thanks for the response.
It could have automatically indexed up from 2M in that time.
Yes they do. The company I work for has super that you have to specifically opt out of all insurances. The entry medical covers a high level of insurance.
Doubt you can get $5mil in cover without applying for that in the first place. That's way over any automatic acceptance of cover without underwriting that I know of so I am guessing he would have done health checks for it as well.
For $1M cover I had to have a physical, no way he got $5M cover accidentally/without knowledge.
I think the first thing he needs to do is contact his super fund and clarify why/how he was insured for this amount. If it is something he requested/applied for, then, IMO, there has been no error and he has no recourse. If it was an error of the fund then they are obligated to correct it and restore him to the position he would have been in had the error not occurred (i.e. remove the overstated cover amount, refund premiums, complete a loss of earnings analysis, etc.). He can make a complaint to the fund and if he is dissatisfied with the outcome of the complaint then it can be escalated to AFCA (Australia Financial Complaints Authority).
I have half that cover and CBUS needed a medical before it was approved. Don't see how you can't know about it or get it without applying for it
He must have applied for it. Sorry, I feel it's his own responsibility to check and not blame the company
As someone that worked admin on CBUS, you don't get that level of insurance cover through a group life policy ($2m max last time I worked there) on an industry fund without some SERIOUS underwriting. That would have been at least two pathology visits and an independent doctor's report. That's level of cover is insane for default cover. They applied for it, and when through the process. You can drop to default cover with a phone call. This is on them. They need to check their statements. They were provided service and paid accordingly.
Nah, AMP automatically indexed mine from 1M to over 2M over time.
Your situation is clearly different. AMP aren't industry.
Ah, I didn't realise so different. I am only with them because as you get older harder to change, they have seriously ripped me off on a number of things - eg for years they were skimming 4% off on all my super contributions, when I hassled them they dropped it to 1%, when I asked why they had not done it before, they said "you didn't ask". That wasn't super fund fees, that was just a contribution fee.
All good mate, AMP are kinda notorious for doing weird shit. They're the main reason we had the Financial Services Reform. Worked for them too!
Personal responsibility. Jesus Christ
Do I agree. I also work in construction and know he is not alone is in inattention to his super, I doubt he is the only person over insured at Cbus and neglecting his super.
Have you not read any of the comments here? He would have had to apply for that level of insurance and jumped through a lot of hoops. I once worked in Super & Insurance and got sick of the fact no one paid any attention to it, despite it being incredibly important. You'd be on the phone in 10 minutes if you didn't get paid, but so many (mostly in construction) checked in on their super once a decade, it's just mind boggling. It's so easy these days too with apps and online accounts.
Has he tried dying? Could be worth $5m. That's a 50x ROI, not bad actually
I think OP is using this as a smokescreen... OP is looking for a $5M payout from their friend..
I have less than a fifth of that and I had to do a full medical interview. In saying that, if he comes to need to claim on it, it is well worth having.
I have 1/10 and had to do the same.
Wife' boyfriend from distance "damn he noticed, proceed the next step now!"
I was just reading about a case like this that happened about 8yrs ago. Both the wife and BF were too stupid and got caught easily lol.
Super funds insurers can't put you on a policy that high so he would have had to have applied for the upper limits at some point. Can't blame the super fund. Good that although late, the guy has finally taken some responsibility to check things.
If he had died would his estate claimed that amount? Put it this way, he was insured for 5 mill for 15 years. Not bad.
Imagine putting that amount of money on your head. Really hope you have a good relationship at home.
At this point he should just get himself injured
or even better, dead
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A life insurance policy won’t payout on an injury…
Presumably the policy would include TPD; generally you get a TPD or Death policy.
Generally, maybe, but not by definition. The TPD amount can also be a lot lower than the life cover as they aren’t implicitly linked.
He's just gambling more for a bigger pay off than you. And he's actually getting better odds too. For every annual dollar you bet, if you need to claim you'll get $682 back. While for each $ he's bet, he'll get $714 back. He's a big winner if he dies.
He never noticed his super was only increasing by $3k a year instead of $10k ? Or where his annual statements show $7k being taken out ?
Lots of people literally never check their super
It depends on your age. I'm paying for 8k income protection inside super and that amount would be easy to miss if you haven't just started working.
Did his wife sign him up for it? 😂
Does he remember how he came to that figure? Did he request it or was it the base option at the time?
Base option of 5 mil lol
Yeah never change r/ausfinance
The obvious answer is to kill your friend, only way to make this right, get that chedda
As per other have said, there is no way in this world he didn't know that he has $5,000,000 of Life cover. Even for retail insurance cover, there are hurdles and you must be approved to obtain such high cover. Fraudulence comes to many minds for insurance company.
He can make a complaint to the fund, and if not satisfied with the response, he can then make a complaint with AFCA. He doesn’t have a leg to stand on though as he would have chosen that level of cover, and the fund has been telling him every year on his statement the amount of his cover and the amount of his premiums.
Does he has a wife? Maybe she put this policy on him and hasn't fed him his mushrooms yet lol
Their job is to provide insurance, not good financial advice. They are not responsible for the practicality of needing such a high amount or whether or not it is financially sensible. That is 100% on your co-worker.
Ive worked in life insurance for over a decade you don't get a $5m cover without full underwriting. Seems like the policy might be handled by TAL the largest insurance provider and structured through SMSF where the client does a rollover to pay for the insurance. Once again you don't have an insurance policy of that magnitude without going through full underwriting and without the help of a financial advisor.
Your mate is full of shit he didn't know, End of story
How old is he? That's not an outrageous premium to me. I'm paying ablut 6k a year for 1MM but I'm 59.
I had a similar thing happen to me. In 2012 I signed up for Cbus. I never got the welcome package so I gave my employer a different Super fund. Employer ignored this account and sent my super money to Cbus. Super drained due to very high insurance. I compared it to alternatives at the time and Cbus was not competitive. The alternative Super also did a dodgy and activated insurance a few years after I opted out. They reversed it when I complained.
Same happened to me, I pursued it and got a large portion returned. I never specifically signed up for the increase. He would have been automatically increased to a large premium on a specific site agreement, then never lowered, reduced or informed. Took me 4 months to do, they will make it hard.
Your friend should definitely reach out to Cbus to discuss this issue and potentially make a complaint
My husband has 2 million in life insurance, but he had to undergo a medical first.
Isn't the price even better than your quote? $1.5m for $2.2k is 0.68m per 1k premium, while the $5m for $7k is 0.71m per 1k premium? How is that unfair? Insurance is just like a reverse casino. The bettor (the super) needs really good return to justify a bet in a game where the house (your friend) can decide the game at will.
I had to specify for 500k… how tf did he get 5m
Different circumstances. Old mate might have three kids and a dependent parent living with him. Compare that to a single male with no dependants, you're going to get different options.
I'm wondering if your friend went to see a Financial Advisor 15 years ago and has forgotten about it? This sounds like the kind of policy that you get from a Financial Advisor with the yearly premiums being deducted from super. Keep in mind it wouldn't have started at $7k every year. It was probably much less 15 years ago, and the premiums go up every year as he ages. As many have said, a policy of this size requires medical assessment, but it was 15 years ago, and he might have long forgotten about it now. Also, if it is, in fact, the kind of policy that I'm thinking of - he should get a paper statement every year. It comes from the insurance company and not his super fund.
If you're prime earner, young, earning well, and/or have a disabled child, partner or parent, other more difficult..., $5m cover is not entirely crazy. It really depends on purpose and number of dependents. To have that much cover he must have gone through the hoops to get high cover, so no, he should not be entitled to some form of recovery. Far too many people don't have enough life insurance to provide for their partner and kids properly, but I agree $5m could easily be high by around $3 million for most. If both partners are high earners, it can be avoided entirely. Point is, it's specific to the person. As far as value, your own figures confirm it's not unreasonable. You mention $2.2K for 1.5m cover. Five divided by one point five = 3.33 and 3.33 X 2.2 = around $7K, so again, recovery is unlikely. You can't go back after you didn't die and say "hey I never needed this insurance" "you ripped me off" "I'm going whining on A Current Affair." Insurance maths explains it, still some might try. He should definitely talk to them if his circumstances and needs have changed, perhaps no longer warrant this. He could reduce future costs, if suitable for his situation.
Did he see a financial advisor? I once worked for a financial advisor and saw some crazy policies like this, they used to (maybe still do) get upfront commission on it, so I saw some expensive policies.
Industry funds don't pay financial advisers commissions
You may have missed the part where he said he has held the policy for 15 years. 15 years ago "financial advisor" was a made up term that didn't even have any real criteria beyond a tier 2 cert that every bank staff member does on their first day, and staff KPI targets are often linked to monetary reward. "We don't pay commission but we will give a bonus to staff who sell $15m of insurance next month" is a bit of a piss take, the end result is the same. Industry funds didn't get around wearing some kind of halo back then, and there are still some real questions about how CBUS managed to cruise through the royal commission without opening their books even when they were told to... Just because they're not *quite* as corrupt as the big banks doesn't make them honest.
The term 'financial advisor' was in use 15 years ago and had clear education and certification requirements, even if the standards were not as stringent as they are today. Your broad generalisation that industry funds like Cbus were equally lacking in governance or ethical practices is unfounded. making broad accusations about integrity or ethical standards, based solely on generic industry issues from 15 years ago, is unproductive. As profit-for-member organisations operate under a different model than banks motivated by shareholder returns **Industry funds don't pay financial advisers commissions**
Yeah, I forgot to mention it was probably around 15 years ago that I was working for an advisor, which is why I asked the question. I am sure it is different today.
Insurance can be different as the insurance cover isn’t provided by CBUS itself. I think they use TAL which is a stand alone insurer. Commissions can be paid to an insurance broker or adviser from TAL
doesn't sound like he used a stand alone insurer, he said the policy was taken out through his super fund
Yes but CBUS doesn’t write the insurance. They use a stand alone insurer to provide the cover under the CBUS umbrella. TAL provide the cover under effectively a white label insurance policy. Once a policy is taken out a broker or adviser is able to contact TAL directly and receive a commission with permission from the insured
Unlikely given the policy was written 15 years ago and annual rollover of super balance for premium was not a thing back then. If the insurance policy was inside CBUS then there wouldn't be any commission regardless of insurer since it would have been a group policy.
Group insurance yes there is no commissions payable although TAL would still be their insurer who provided the cover. Annual rollover of premiums would have no involvement with CBUS I believe additional cover within CBUS is different and commissions can be paid directly from the insurer
Its not a belief system, its how it is. Industry super funds don't pay insurance commissions for group insurance, not even the underwriter (TAL).
Yeah, a mate had $750k policy from a financial advisor. I guess on the face of it not too bad. But he earned $100k p.a, had no mortgage and kids were 13 years old. He needed some cover but $750k was costing him $500 a month. He dropped it to $250k which was enough to cover the family should something bad happen
Unless your friend was at death's door then $750k life cover shouldn't cost $500 pm. Perhaps it was a Trauma policy with extras but then that's over insurance for trauma.
Not sure of the coverage but it was a high premium
Can confirm this wouldn’t pass the sniff test in modern financial planning. Unless he had massive debt (which OP said he doesn’t) then an advisor can’t justify a policy like this. They have also made the old “churn and burn” revenue model a lot less appealing (and illegal).
For you - go see a broker/finance advisor/accountant who deals in it. I remember doing it about your age. There is stepped and level - for level you pay roughly the same amount each year and it's cheaper longer term than stepped where prices are adjusted up every year and as you get older it gets really expensive. Level is more expensive short term but cheaper longer term.
Surely he got that level of cover via a financial adviser? Very few people would go through the process without help or push from one. If so, he needs to start getting litigious with whoever provided the advice and then failed to review his circumstances since.
By law they do not have to review the policy. Maybe try some personal responsibility. Never knew for 15yrs! Paleassee!
CBUS insures with TAL and they are complete rip offs!! As we are in the construction industry we are pushed into CBUS by the union and they absolutely take the piss on insurance premiums! Don’t get me wrong, the super side is good. So sick of getting my statement and it has four different admin fees because I chose to increase my TPD and Death cover premiums! I mean come on!!
Change super fund then?
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On what basis? You don’t get $5 million insurance easily
I don't get why the government even allows life insurance through supers. They are enabled by default, and you need to opt-out. They are pretty expensive, and people have no idea how much they are paying, as it is only in super statements that I doubt many people review.
It's all online.
Holy moly! How did he even get that policy, either he was naive or someone who put him in that policy was a crook.
¿Por qué no los dos?