For many people, reviewing an insurance policy is right up there with tax returns or visits to the dentist. It’s not the most palatable task, but it’s an important one that needs to be done every so often.
If you hold insurance through your super fund, it can be easy to forget about, as your premiums are deducted from your super and not your pocket, and so you don’t have the regular and visible reminder of a monthly payment leaving your bank account— which is why it’s even more important to keep on top of. Here are 5 things to check on with insurance through super:
1. Is my account still active?
If you have a super account that has been lying dormant for a good while, now is the time to check on it. By law, your super fund must cancel insurance on any inactive super accounts that haven’t received contributions for at least 16 months. And, some funds may cancel your insurance if the account 4. balance is too low. While this is designed to protect you from paying premiums for policies that you may not need, it’s really important for you to make that decision yourself. Your super fund is obliged to notify you before cancelling insurance on an account, but if you want to keep the policy intact, it’s best to get on the front foot and let your super fund know, or start making contributions to that account.
2. Are my details up to date?
It’s not commonly known, but your insurance premiums can be affected by the type of work that you do. Your current premiums are likely to be based on several pieces of information you provided, including your ‘occupation rating’. In other words, how safe or risky your line of work is assessed to be. If you haven’t provided enough details, your super fund may decide this for you, which could result in you over paying or not being adequately covered. Similarly, if your salary has changed since you last took out or updated the policy, you may not have the level of cover you need.
3. Should I offset my insurance premiums with extra contributions?
While it may be handy for short term cash flow to have your insurance premiums paid from your super balance, it’s important to remember that the premiums may have a sizable impact on your super balance over time, meaning less money to live on later in life. Depending on your current circumstances, consider whether it’s a good idea to offset the premium payments by making extra contributions into super.
4. Do I have more than one insurance policy?
If you have more than one super account, there’s a good chance you may have more than one insurance policy too. It may mean that you have extra Death and Total and Permanent Disability cover, however you may not be eligible to receive an Income Protection benefit from more than one policy, so you could be paying unnecessary premiums. The government introduced the ‘super stapling’ rules in November 2021 to prevent people from unintentionally having multiple super accounts when changing employers, but it’s still worth checking whether you have and need to keep multiple super accounts along with the insurance it may hold.
5. Is the level of cover right for me?
Rather than it being ‘set and forget’, your insurance policy should evolve as your life circumstances evolve. Even small, incremental changes in your circumstances could have a big impact on the type or level of insurance you may need over time. If, for example, your monthly income or expenses have changed significantly, your mortgage balance or debts have changed or there has been a substantial increase in the value of your property or other assets, it may be time to reassess your cover. Or perhaps, a few years have passed since you took out the policy and now you’re in your 50s or 60s. In which case, you can decide whether you still need the same level of cover.
A word of warning about making changes to an insurance policy
Being under insured or over insured can both be costly. On the one hand, no-one wants to pay more in premiums than is absolutely necessary. On the other hand, making changes to your insurance policy purely to save money may impact your eligibility to make a claim, or leave you without sufficient cover. Before you make changes to an insurance policy, it’s important to assess your personal circumstances before deciding on the best course of action.