This follows representations by Breast Cancer Network Australia and other organisations. Under the current provision for early access to superannuation, a person with a terminal illness is required to obtain a certification from medical specialists they have less than 12 months to live. It is proposed this change will take effect from 1 July 2015.
As the government’s proposed change (when made) will only impact the conditions of release stated in the SIS Regulations, this does not automatically mean that insured terminal illness benefits will become payable if medical specialists indicate a life expectancy of 2 years. The terms of the insurance policy are a separate matter, even though there is an obligation to ensure that the terms of the insurance policy are consistent with conditions of release in the law.
This announcement, therefore, has consequences for insurance policies (this may depend on how the insurance policy is currently drafted), as well as implications for product disclosure statements (for new members) and, possibly (depending on how specific the product disclosure statement currently is about terminal illness benefits), significant event reporting for existing members. As it is not an adverse change, significant event reporting can take up to 12 months (however, from a broader risk management perspective, earlier notification may be better to manage the risk of complaint about a delay in alerting members that ‘easier’ access to super is now possible in the case of terminal illness). There are also implications for any marketing material that deals with this topic (in particular, care should be taken not to promote the government announcement in terms that suggest insured benefits will also be able to be accessed, until the relevant insurance policy is checked).
Even though the announcement is not yet law, as it is intended to take effect from 1 July 2015, it should be taken into account in any new PDSs that are issued, and any legislative updates being prepared as part of the periodic reporting cycle (whether for significant event reporting or general information purposes). Website information should also be updated.
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