Positive Life NSW Blog

HIV and superannuation insurance

Posted by on in Advocacy and Policy

IMAGE: Selection of Australian dollar bills

When someone applies to start superannuation insurance cover at any time other than commencing with a new employer, their health will be assessed and the insurer will apply a preexisting condition that excludes any HIV-related claim.

This article summarises the types of super funds, the types of insurance available through super funds and what might happen to people with HIV when they apply in various circumstances for insurance cover via superannuation.

Types of super funds

Basically, the Australian superannuation industry is segmented into not-for-profit funds (industry, public sector and corporate), retail funds and self-managed superannuation funds.

Industry funds are governed by boards with equal representation from unions and employer associations. With the gradual increase in the compulsory superannuation contribution to 9%, these funds have grown very large. AustralianSuper, the largest industry fund, now has assets of over $30 billion. Industry funds operate on a not-for-profit basis.

Public sector funds provide retirement benefits for public sector employees. A number of these funds cover Commonwealth public sector employees, the different state public sector employees and local government employees in each state. Like industry funds, they operate on a not-forprofit basis.

Up until the late 1990s, many medium and large-sized companies operated their own corporate superannuation funds for their employees. However, over the past 10 years, the number of corporate funds has fallen dramatically, as many corporations chose to outsource to either a master trust or an industry fund. The still-existent corporate funds also operate on a not-for-profit basis.

Retail funds are operated by financial institutions such as banks and fund managers. They include personal master trusts for individuals and corporate master trusts that employers can select as the default fund for their employees.

Self-managed superannuation funds have just one to four members and are operated by individual trustee members, who are typically assisted by accountants or financial planners in the operation of their fund.

Types of insurance cover provided through super

Each type of fund can provide insurance for death and disablement. The most common type of insurance cover is for Death & Total and Permanent Disablement (TPD), which provides a lump sum benefit in the event of the member’s death or TPD. TPD is generally defined as suffering an illness or injury that renders someone unlikely ever to be able to engage in their usual occupation or any occupation for which they are reasonably suited. It generally covers the loss of use of limbs or eyes and the inability to perform simple daily tasks such as bathing, dressing and eating/drinking.

A default level of Death & TPD cover is usually provided to members of employersponsored superannuation funds when they join a new employer, without the need for any health evidence. The level of default cover is different for each fund. While the standard cover provided by most funds is Death and TPD, many funds also provide the option for Death Only cover, while a few only provide Death Only cover.

Most employer-sponsored superannuation funds also provide Income Protection cover that provides an income benefit in the event of temporary disablement that renders a member unable to work for a period. The amount of cover is generally linked to the member’s wage or salary. This benefit is paid for a certain maximum period which is generally two or five years or a long-term benefit to age 60 or 65. Payments commence after the member has been absent from work for the waiting period, usually 30, 60 or 90 days.

Insurance and people with HIV

Most people join an employer-sponsored superannuation fund when they start with a new employer – either a corporate fund, industry fund, public sector fund or corporate master trust. These funds generally provide default Death & TPD cover for all members (a few also provide default Income Protection cover), with no requirement for health evidence at the time of joining. Thus people with HIV will be accepted for this default cover without having to provide any evidence of their health status when they join the fund on commencement with a new employer. When a claim for the default level of insurance is made on such cover, there are generally no exclusions based on health conditions, including HIV.

Some employer-sponsored funds allow members to pay extra premiums to increase their level of insurance coverage beyond the default when they join the fund (or within a certain period of joining, for example, 60 days) with no requirement for health evidence. This option might apply to both Death & TPD cover and Income Protection cover.

This additional insurance generally covers any preexisting conditions the member had on application, including HIV. So people with HIV who apply for additional cover in this way should receive the additional amount in the event of a claim, even if the claim is HIVrelated. The exception will be for those who make a claim within one to two years of joining one of the few funds that have a limited period that excludes pre-existing conditions – these funds exclude the additional amount (beyond the default level) for any claim in the first one to two years if it relates to a pre-existing condition.

Additional cover on a 'significant life event'

Most personal master trusts and an increasing number of industry and public sector funds provide the option to increase your insurance cover if a 'significant life event' occurs. Each fund has its own definition of significant life event, which typically refers to a non-health-related event such as:

  • commencing/increasing a mortgage
  • completing a first undergraduate degree
  • becoming a carer
  • marriage
  • birth/adoption of a child
  • divorce

Additional cover on an event like this is generally provided without requiring health evidence, although a few funds apply a one-to-two-year pre-existing exclusion. So people with HIV who have this extra cover and make a claim are likely to be paid the additional insurance amount, even for HIV-related claims, except for claims in the first one-to-two years from one of the funds that have a limited period pre-existing exclusion.

Health evidence

When a super fund member wants to increase cover in circumstances other than on starting with a new employer or on a significant life event, they need to undergo an underwriting process in which they provide health evidence, usually in the form of a questionnaire. The fund’s insurer then decides whether to accept the requested level of cover and whether any exclusions or premium loadings will be applied, based on the information disclosed in the questionnaire. The insurer may also request further information from the member or request blood tests or other medical tests before they finalise their decision.

If an HIV positive person applies for cover in this way, they should disclose in the health questionnaire that they have HIV. (See the section below for a discussion of the need for full disclosure and privacy provisions.) The insurer is likely to apply an HIV exclusion to the additional cover, if they accept the increase at all. This means that any HIV-related claim is likely to be denied on any additional amount of cover that has been granted.

Applying for cover in personal superannuation

Personal superannuation products do not provide default insurance cover. Likewise, traditional life insurance policies sold outside superannuation typically have no default cover. For each of these, the member has to go through an underwriting process by providing health evidence. When a person with HIV applies for cover in one of these products and discloses their HIV status in the health questionnaire, the insurer is likely to apply an HIV exclusion and any HIV-related claim is likely to be denied. So such cover hardly represents good value for people with HIV.

The importance of disclosing HIV – but only if asked

While an HIV-related claim will generally be paid on default insurance (unless a specific HIV exclusion has been applied), an HIV-related claim will be denied if the member was asked to provide health evidence but did not disclose that they were HIV positive on application.

It's very important that someone with HIV who is asked for health evidence when applying for insurance cover (usually in a health questionnaire) does disclose that they have HIV. The questionnaire may ask directly if you have HIV or it may ask for any pre-existing conditions. In either case, a positive person should disclose that they have HIV. If they don’t, while the insurer may initially agree to the cover and accept premiums for that cover (perhaps for many years), any HIV-related claim is likely to be denied – making this an expensive and futile exercise for the member who has paid premiums.

It's important to realise that any disclosure of HIV to an insurer in such a questionnaire is confidential and protected by privacy legislation, so it can only be used for the assessment for insurance cover. The information cannot be accessed by other parties such as employers.

Superannuation funds do not generally provide blanket exclusions for HIV-related claims. Insurers are increasingly treating HIV just like any other illness. HIV is taken into account in the underwriting process (when health evidence is required for cover), but does not preclude the payment of a claim if the insurer accepted the cover on application.

Possible HIV exclusions

At least one fund in the health sector does impose an HIV exclusion to default cover, but the exclusion only applies to people who had HIV when they joined the fund and who are employed by an HIV/AIDS affirmative action employer.

Most funds do not disclose all their terms and conditions in their disclosure documents, so when a person with HIV considers joining a fund, they should ask a general question about whether there are restrictions on cover for any specific conditions, to make sure the fund doesn’t have an undisclosed HIV exclusion.

Summary

For a person with HIV to get the most out of their insurance within superannuation, you should disclose that you have HIV if asked as part of a health questionnaire. But keep in mind that if, as is likely, you are eligible for default insurance cover that does not require health evidence, you won't need to disclose your HIV status when you join a fund. If you are already covered and have never been asked for health information, then HIV-related claims will be paid. Someone who is accepted for a certain level of cover (either through default or through underwriting) before becoming HIV positive will generally be paid a claim for an HIV-related condition. Seroconversion after being accepted for cover will not disqualify a member from a claim. Funds do not apply blanket exclusions for HIV. Insurers generally only exclude claims if the member had HIV when they went through an underwriting process for insurance cover. If HIV was disclosed at the time of application, cover is likely to explicitly exclude any claim for HIV

If someone with HIV was asked to provide health evidence but did not disclose it in their application, any later HIV-related claim will also be refused. If someone becomes HIV positive after they are accepted for cover, whether they were accepted through default cover or by providing health evidence, an HIVrelated claim should be paid by the insurer.

The best way for people with HIV to secure death and disablement insurance is to

  • take up default death and disablement cover when they join an employer-sponsored fund when starting with a new employer
  • use any available option to increase death and disablement cover without health evidence on joining a fund
  • use any available option to increase death and disablement cover without health evidence on a significant life event

by Susan Ardill, with thanks to Ian Fryer of Chant West. To discuss the Chant West report in further detail, contact Lance Feeney at Positive Life NSW on lancef@positivelife.org.au

Last modified on

Comments

  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest
Guest Saturday, 04 April 2020

Givenow - make a secure online donation to Positive Life NSWLocation: Suite 5.2, Level 5, 414 Elizabeth Street, Surry Hills NSW 2010
Postal: PO Box 831, Darlinghurst NSW 1300

Telephone: 02 9206 2177 or 1800 245 677 (freecall)
TTY: 131 450    Fax: 02 9211 5672

 
proudly sponsored by    website design and build by

digialpac                            avernis

Images used are stock photos and do not imply any HIV status, sexuality or behaviours.