Have you checked your personal insurance lately? From 1st July 2019, super funds have cancelled insurance on accounts that haven’t received contributions for at least 16 months.
Just like your home or car, your life and your ability to earn an income can be some of your most important assets. Having insurance cover may provide some financial protection if you are unable to work due to disability or if you were to pass away.
If your super fund receives contributions regularly, don’t be alarmed as your insurance should remain in place. However, this does not mean you should become complaisant. It doesn’t hurt to review your insurances and ensure you have enough cover in place.
If you have numerous super funds that haven’t been receiving contributions, you should contact your super fund and request to ‘opt-in’ to your insurance and consider directing your contributions to this account.
But what are the benefits of insurance through super?
- It’s often cheaper because super funds purchase insurance policies in bulk
- You can get the cover you need for you and your family, even if money is tight
- It’s easy to manage because premiums are automatically deducted
- Some funds automatically accept you for cover without requiring a health check
- You can usually choose the amount you want to be covered for
However, you also need to be aware of the following:
- The types of insurance and the level of cover may be limited.
- If you change super funds, your cover may cease
- There can be delays in receiving benefits as the benefit is paid to the fund first.
- If no beneficiary listed on your fund, the superannuation trustee will decide who gets your benefits
- Life insurance coverage through super ends when you reach a certain age.
- Insurance premiums are deducted from your super balance, reducing the money available at retirement.
If you have more than one super account, you may be paying premiums on multiple insurance policies. This could reduce your retirement money, especially when you can only claim on one policy at one time.
Before switching or consolidating super funds, make sure you can get the death, TPD or income protection cover you want in your chosen fund. Be particularly careful if you have a pre-existing medical condition or are aged 60 or over, as you may not be able to get insurance again without health checks.
If your cover is cancelled and you later decide you’d like to have cover through your account, you will need to apply through the insurer’s standard application and assessment process. This may require you to provide medical evidence and history to the insurer. The insurer may accept or decline any application.
So… are you sufficiently insured? Or are you over/under insured?