What do you mean by having my Insurances owned in Superannuation…?

Many Australians may not be aware that they probably have some insurance cover attached to their super fund…. Most don’t know how much they have, what they’re covered for and – unbelievably – what they are paying for this cover…! It just doesn’t make sense!

Insurance protection is important – but not all super funds offer insurance, or the benefits or options offered may be limited in their scope and can quite often be very expensive. 

 What Are The Types Of Cover?

Typically, the types of insurances you can have within super are death, total & permanent disablement & income protection cover. 

Life cover provides a lump sum amount in the event of death. TPD insurance will also pay you a lump sum amount, this will generally only be in the event you are totally and permanently disabled and are not likely to be able to ever return to the work force again (based on 2 independent assessors).

Income Protection inside super is generally known as salary continuance. A policy inside super has strict rules that need to be met. A policy will only offer standard benefits, meaning the only benefit you will receive is your insured monthly benefit, which is only 75% of your gross income. The one downfall is that your insurable income is not guaranteed, and you will generally have to provide financial evidence at claim time. 

So if you initially insured yourself for $100,000 income but you were only earning $80,000 when you make your claim, you will only receive a benefit based on 75% of your $80,000 income as this was your earnings at the time of claim. As you can see, there are limitations having your income protection cover within super. 

This insurance inside super is NOT guaranteed….

Most companies default cover generally only offer a benefit period of 2 years, and not to age 65, being your working time frame. 

One benefit of having your insurances within your super fund is that you allow yourself to have the necessary insurance cover, without the out of pocket expense from your cash flow. However, you need to be aware, that by paying insurance premiums from your super fund, you will reduce your superannuation retirement balance, so you need to look at strategies to help offset this expense   

We all die with a will regardless if we have one in writing.

In the estate planning world if you have a valid will in writing then your wishes should be met providing the document has been established correctly.

If you don’t have a Will then in most cases you will find that the public trustee will be in control of your dealings, this could be quite costly, but your wishes may not necessarily be adhered to because you have given instructions to how your affairs are dealt with.

Yes it’s true that you’re not here to deal with it so who cares, however by having a valid Will in place this can make life so much easier for your loved ones dealing with your affairs whilst still in the grieving process.

Did you complete your will from a will kit from the post office or a tick a flick print out. Yes these wills are very cheap, however it has been found that most of these wills are not completed correctly, or witnessed correctly, hence why these wills don’t get granted probate and the Will becomes invalid, not a great outcome. Cheaper isn’t always the right way to go when it comes to dealing with your personal affairs.

We all know these days that ringing up a call centre to ask a question on behalf of your spouse or partner is nothing more than a waste of time, if you’re not the account holder, you won’t be given the information, that’s the Privacy Act and rightfully so.

Did you know you can have a written documentation that allows you to speak on behalf of this person if they were to become of unsound mind or in a coma for a short period of time or they were overseas at the time they required their affairs to be dealt with. Affecting an Enduring power of attorney allows the people you nominate to be able to act on your behalf if you are not in a capacity to do so at the time. Nominating two people is ideal in case one person you have nominated happens to be in a similar position than you at the time, having a backup person can help guarantee your affairs are being looked after.