Australian Ethical drops fees

Australian Ethical has made changes to its insurance offering to provide Standard Default Cover members with a higher level of coverage at all ages, while also reducing fees for most age groups, while other age groups will see costs unchanged.

From August 1, the $8.9 billion super fund will also change super and insurance fees to ensure the costs of insurance administration are applied only to members with insurance.

Standard Default Cover members will experience an increase in the amount of Death and Total & Permanent Disablement (TPD) insurance cover they receive, while Death and TPD cover for others will become or remain Fixed Cover.

In addition, premiums and fees in relation to all types of insurance cover will change and there will be a reduction to the Administration Fee for Super and Pension customers.

"We've worked with our insurer (MetLife) to minimise the cost and complexity of delivering insurance benefits to you," Australian Ethical told members.

"In working towards our new insurance offering, we have considered the evolving financial needs of our members, and we remain committed to providing appropriate levels of Default Cover along with the built-in flexibility you may need to tailor your own insurance arrangements, at a reasonable cost."

Changes to the standard age-based Default Cover means members will automatically see their level of cover increase based on their age but will be provided as unitised cover from August 1 and the cost per $1000 of age-based Default Cover will be reduced.

In addition, Australian Ethical said insurance administration costs will no longer be covered by an administration fee in recognition of the introduction of new insurance fees.

As a result, the account balance component of the administration fee will be reduced to 0.25% p.a.

"The reduction will lower administration fees for all members, and partially/or wholly (depending on your circumstances) offset the impact of that part of the insurance fee allocated to cover insurance administration costs," Australian Ethical said.

"We believe that the introduction of the insurance fee that will apply only to insured members, and the resulting reduction in administration fees for all members, is the most equitable way to pay for insurance related services provided by the fund."

Currently, the cost of administering insurance arrangements is covered by an administration fee of $68 p.a. plus 0.26% p.a. of a members' account balance.