Sunsuper’s new total and permanent disability (TPD) insurance product will reduce premiums for default members by 15 per cent.
The new product, called TPD Assist, is due to be launched in July and has been developed following an 18-month research project that found 36 per cent of TPD claimants had returned to work or were actively seeking employment.
“As a result of working closely with our insurer – AIA – we’ve been able to reduce the TPD premiums by around 30 per cent. As standard, most of our members are covered for death and TPD, so across them it gives a saving of 15 per cent,” said Wanda Britton, head of product at Sunsuper.
She added that as only 1 per cent of the membership make a claim, one of the priorities in redesigning the default TPD product was ensuring it did not erode retirement benefits.
“We have to be thinking across the broader membership and when you are talking around 15 per cent reduction of death and TPD, that’s a significant saving.”
The research on which TPD Assist is based found that 69 per cent of members who had made a TPD claim wanted assistance in vocational rehabilitation, retraining or upskilling, and 66 per cent wanted help finding a job.
“The research also told us that around 66 per cent of members spent their claim money on vocational rehabilitation and retraining, so it’s definitely something they are looking for,” Britton said.
As such, Sunsuper has redesigned its TPD product to promote rehabilitation and help people get back to work and, according to Britton, there are three key elements that make this product different.
The first is a reduction in the waiting period before a member can claim, as being able to access rehabilitation early is a key factor in recovery.
The second element is introducing rehabilitation and retraining for the members.
“And again, that came out of the research we did. When we asked members how we as a super fund can help more, one of the things they said was: ‘You paid us the insurance claim, and that was really helpful, but you could have helped me more. You could have helped me with retraining, helped me with vocational rehabilitation’.”
The third key element is providing the payments in six instalments over a minimum of five years, unless the member is able to return to work earlier, in which case the payments stop.
“That is really about recognising that 36 per cent of our members did go back to work in that second or third year,” Britton said.
She added while none of these elements alone would make this product work, the combination of all three allowed for a more sustainable product.
While the product has instalments, it also still allows for lump-sum payments in cases with an injury or event classed as catastrophic.
“As an industry, it has been evident to us the current TPD arrangements are not sustainable. So as an industry we need to look to better ways to innovate and get better outcomes for our members, and I think this product goes a long way to starting that journey.
“But more broadly for the industry, I would be surprised if you don’t see a number of providers significantly changing their TPD cover to an instalment-like design. There has been a lot of talk in the market about it, and I feel people have been waiting for someone to make a move, and here at Sunsuper we believe it’s in the interest of our members to do that now.”