Insurance explained

As part of our commitment to implementing the requirements of the Insurance in Superannuation Voluntary Code of Practice (Code), Rest has designed its automatic insurance cover (cover that you can receive by default) so that your default insurance premiums do not exceed the equivalent 1% of an estimated level of your salary for your lifetime of being a superannuation member. The salary level is determined across the whole of our membership. This became effective from 1 April 2020 for Rest Super members.

To do this, Rest have worked closely with our insurer TAL Life Limited (TAL) and have used the following approach:

• When we set the cap for the maximum cost of our default cover, we calculated this cost by spreading the maximum cost of our default cover, over the lifetime of our members having superannuation. This reflects that insurance cover and its costs will vary over your time in super, much like your salary will.
• The lifetime of a member means starting at age 18 and retiring at age 60.
• Your insurance cover will increase and decrease as your need for insurance changes.
• We have taken a prospective view of member salaries which includes a full year of superannuation guarantee (SG) contributions and then taking the median salary by age. This is consistent with our assumption that members stay with Rest for their lifetime.

For Rest Corporate members the 1% limit may not apply. We’re considering if this 1% salary limit is right for our corporate plans or what a reasonable alternative would be.

Our premium adjustment arrangements

Rest operates a Premium Adjustment Model (PAM) with its primary life insurer TAL Life Limited (TAL). This model covers the current insurance arrangements with TAL and helps Rest set insurance pricing with TAL. It enables us to stabilise the level of premiums our members pay for insurance, which are directly based on the insurance claims we pay out to our members.

Current premium adjustment arrangements

Our current premium adjustment model with TAL started on 1 December 2019. The premiums our members pay for insurance, are based on our current and historical claims experience - the amount of claims we have paid out to our members in the past for sickness, injury or death. The premiums paid cover the cost of paying out these claims as well as the direct costs of managing our insurance administration.

Premiums are reviewed annually under the PAM arrangement which means members are less likely to see big changes in premium rates. If there is a reduction in the premiums paid to the insurer, the amount will be credited to Rest’s Insurance Reserve. These overpayments can then be used to either cover the costs of managing our insurance administration or are passed back to our members through a premium subsidy, much like the previous subsidies we paid over the period of 2008-2013 and 2017-2019. If premiums do need to increase, Rest will attempt to limit any increases to members.

Prior to our relationship with TAL, Rest had a similar premium rebate agreement with its previous insurer AIA Australia Limited.

Insurance Reserve

Rest’s Insurance Reserve is managed in accordance with the Fund’s Reserving Policy. This insurance reserve is used to cover the cost of running our insurance administration and for the benefit of insured members of Rest through reductions in future insurance premiums. Every year, Rest reviews its insurance strategy and the insurance reserve policy, to determine whether any changes should be made. This includes adequacy of reserve level, impact on future insurance premiums and whether any distribution of excess is possible.

Insurance Strategy  - This outlines some of the principles we considered when designing our automatic insurance cover and will help you decide whether automatic insurance cover is right for you.

And we’ve created Key Facts Sheets for Rest Super and Rest Corporate allowing you to easily compare the key features of our automatic insurance cover offerings against others in the market.

The following strategic priorities guide our mindset, decision-making and behaviour and form the basis of the Rest's claims philosophy:

• Hone for speed: we’re always refining our process to settle claims faster
• Minimise impact: we limit what we ask of others
• One team: we’re an integrated and supportive team
• Every story matters: we listen to and respect our claimants’ stories
• Supported journeys: we help our claimants complete their claim, and aid in their recovery.

 
Rest’s claims philosophy aims to

• provide an empathetic claim experience as opposed to a mere transactional claims process
• ensure members can easily access support in times of need
• actively care for members and prioritise care over assessing/settling a claim
• support members through the claims process and assist them in the next steps of their journey.

 
The Rest claims philosophy includes consideration of the approach its Insurers have when managing claims. Rest expects that its Insurers abide by the terms documented in the Insurance Services Deed and

• understand and apply the principles and requirements dictated by the law in relation to assessing the merits of each claim;
• comply with the FSC Life Insurance Code of Practice;
• adopt a professional and positive approach towards claims assessment; and
• promptly pay claims that satisfy the policy terms and conditions.

Why have TPD cover?

Rest’s Total and Permanent Disability (TPD) insurance cover is designed to provide a lump sum payment to support you with the financial expenses you may incur (such as medical treatment or ongoing care) if you have a sickness or injury and it’s unlikely that you will ever work again in a suited occupation.

How much cover is provided?

Our Rest Super default level of TPD cover has been designed to provide some initial financial support for a typical member, regardless of whether they are full-time, part-time or casual, based on the age of the member and how much we believe they can afford to spend on premiums while protecting their retirement savings. Our Rest Corporate default level of TPD cover is chosen by your employer and can be found in your Employer Plan Summary.

The default level of TPD cover might not be right for everyone, so you have the option to apply for a level of cover that is right for you – whether it’s higher, or lower than the default level.

What happens if I need to make a claim?

If you need to make a claim, Rest’s insurer will consider your ability to perform the same (or similar) role, taking into account your previous education, training and employment experience. If you didn’t work at all for 13 months or more before being certified by a doctor as disabled, Rest’s insurer will look at different aspects of your sickness or injury (such as not being able to look after yourself ever again without help, or losing limbs and/or sight), prior to determining how likely it is that you can return to work in a role that reasonably meets your education, training or experience.

If your claim is accepted by the insurer, the insurance benefits will be paid into your super account. If you then confirm that you want a lump sum paid to you, Rest is required by law to check that you meet what is known as a “condition of release” which means that you can have your super (including insurance benefits) released to you before reaching your retirement age. If a lump sum is paid to you, all or part of your withdrawal may be taxed.

Other terms and conditions apply to TPD insurance cover. You should read the relevant Insurance Guide here to determine if Rest’s TPD cover is right for you.

Why have Income Protection (IP) cover?

Rest’s IP cover is intended to provide you with a monthly income benefit to replace up to 77% of your pre-disability income if you have an extended absence from work due to sickness or injury. An additional amount reflecting 12% of this monthly income benefit is also included to replace the super contributions which would otherwise be provided by your employer you were working.  This just helps protect your retirement savings.

How much cover is provided?

The default level of IP design is based on the generally low salaries of our Rest members who work in the retail industry. This helps to improve the affordability of premiums and reduces the chance of providing a member with more IP cover than they could actually claim. The level of IP is flexible, and members can apply for a higher level of cover (up to 77% of their salary, plus 12% of the monthly income benefit for super) if they need it due to having a higher salary. 

The level of default IP increases over time, similar to the earnings of a typical Rest member (whether they are a full-time, part-time or casual employee). Cover is generally lowest at younger ages and increases as your age, and your salary is more likely to increase, then decreases again as you near retirement.

In addition to having the flexibility to change your level of IP cover, you can also change the waiting period and the benefit payment period at any time before an injury or sickness results in you needing time off work. Any changes to your IP cover will result in changes to the premium you pay for your cover.

What happens if I need to make a claim?

You may be able to claim an IP benefit if you stopped working or are unable to work at full capacity in your usual job due to injury or sickness for a prolonged period. (The default “waiting period” for Rest Super’s IP cover is 60 days.

If Rest’s insurer determines you are eligible to receive an IP benefit, the first monthly income benefit will be paid directly to you by Rest’s insurer. The first monthly income benefit is usually made at least one month after the waiting period has finished. IP benefit payments are assessed on a monthly basis and will continue to be paid to you until you can be reasonably expected to return to your usual job, however this benefit can only be made for a maximum period of time. (The maximum “benefit payment period” for default IP cover is 5 years.)

If you make an IP claim and are approved and are receiving income from other sources due to injury or sickness at the same time, the monthly income benefit will be reduced. This is to prevent you from receiving more income than when you were working as required by law.

In the event you make an IP claim, the Claims Team at Rest’s insurer will support you to return to your pre-sickness or pre-injury life where possible through things like rehabilitation support, retraining or re-education.

Other terms and conditions apply to IP cover. You should read the Rest Super Insurance Guide to determine if the Rest’s IP cover is right for you.