At various times the subject of default insurance through superannuation is highlighted by the media – but do you really know what insurance you have inside your super account?
If you have a super account set up through or by your employer or with an industry fund, you will most likely have some level of Life Cover and Total and Permanent Disability Cover attached to your super account, and possibly even some Income Protection. You may not know it is there, but even if you don’t, you will still be paying for it.
There are both pros and cons for default insurance in super. It provides a type of ‘safety net’ for those who might not otherwise think to or qualify for retail or individual insurance cover, and cover can be in place even if you would not be able to afford it if you were required to pay for it out of your own pocket. However, the cover can be minimal, it can reduce automatically over time (whether that is best for you or not) and the cost of your insurance will be reducing your superannuation for retirement.
So what should you do?
The first step is to determine if you have cover or not, and then get as much detail as you can. Check out your superannuation statements, call your superannuation fund directly or jump online if you have online access to your account. You can also read the PDS or ask questions to your superannuation fund about what options you have for insurance – if you don’t have any already can you apply for some, what are the inclusions and what are the costs.
Insurance can get complex, particularly when held in your super fund as there are restrictions on the types of cover, how it can be paid and how it will be taxed if it is held inside super – it is possible to get caught out when you or your beneficiaries go to make a claim.
Where to find more information
If you think that the cover through your super is not the right fit and needs adjusting, you can speak to a Financial Adviser to get a thorough understanding of what your needs are and what levels of cover would be right for you, or in some cases your superannuation provider may also be able to provide you with advice.
Our team of specialists are here to give you advice on your insurance through superannuation
To ensure you are equipped with everything you need to make informed decisions about insurances through superannuation, or for any other strategic financial advice, get in touch with the Rethink Financial Planning team. We’re a team of highly-trusted financial advisers in Newcastle and can offer you personalised financial advice to help you take control of your financial future.