Life’s journey is an exciting one. New landscapes to discover and new opportunities are always around the corner. As much as we like to plan for the future, life has a tendency to throw us some curly balls and this may cause uncertainty and anxiety. That need not be the case if we consider our options and make some good choices as our life’s circumstances evolve and change over time.
Why should you insure your health and your life?
Nothing is so important as your life. We tend to insure our homes, our car and even our household goods and yet we neglect to protect our own life in the case of an unforeseen event or situation. Our ability to make a good living and to protect not just our income, but the lively hood of those who are dependent upon us is perhaps our greatest emotional need. Protecting ourselves and our loved ones speaks from the core of who and what we are as caring human beings. It makes sense to insure yourself, but to not be fearful of the future. Being afraid of the future and feeling you are compelled to buy insurance does not necessarily bring about personal well-being. Having a balanced approach and seeking the right solutions that meet your personal circumstances is important.
What can super funds offer you by way of insurance cover?
Most super funds will offer members three types of insurance cover. These insurances are listed in the table below.
You should check with your super fund what insurance cover you are entitled to receive. You should then consider if it is sufficient and the terms and conditions that it provides will help you to meet your personal needs before accepting it.
Having insurance within super is a cost effective and easy way to protect you in case of an unforeseen event such as ill health, disability and to protect your dependents in the event of your death. It is important to consider the cost of insurance as it is paid from your super account. Please ensure you review the benefits and costs carefully and seek appropriate advice.
Insurance for people under the age of 25 or with a low super account balance.
Insurance will usually be provided automatically for new super fund members. However, if you're a new super fund member aged under 25, or your account balance is under $6,000 you generally will NOT receive insurance cover unless you elect to apply for the cover. It is important for you to contact your super fund and request:
What are the advantages or disadvantages of having insurance in super? Here are just a few.
1. Super funds have an enormous buying power when looking to insure the lives of their members. So super funds will attempt to get the best terms and cost (premiums) that allow you to have an adequate level insurance cover. Generally speaking, insurance within super can be cheaper as opposed to holding insurance outside of super because the super fund can purchase cover in bulk for the thousands of members within the fund.
2. Insurance in super is usually offered as a default amount of cover. Whilst this goes someway to achieving an effective level of cover, it may not be tailored or suited to the member’s personal needs. The member however can apply to increase or decrease their cover at any time.
3. It can be difficult to get insurance cover outside of super because of the person’s medical history or health condition. Having a base level of cover within super may go some way in protecting a member from an unforeseen event in the future.
4. Insurance in super is usually provided without asking the member questions about their medical history or to undertake medial checks. At times however, it will be necessary to provide some type of medical evidence before the insurance cover is accepted. When insurance cover is offered, it is important to carefully review the terms before cover is accepted.
5. Most people are conscious of the family budget, so having extra money coming out of their take home salary to pay the cost of insurance cover is not necessarily attractive. The cost of insurance within super is usually deducted from the member’s account balance every month. The balance in a member’s account has been growing in a concessionally taxed environment and therefore allowing the cost of insurance to be deducted from a member’s account is a tax effective and cost-effective way to fund premiums.
Need more information?
The following links will assist you further to obtain information about the types of insurance cover shown above.
Life cover - https://moneysmart.gov.au/how-life-insurance-works/life-cover
Total & Permanent Disablement cover - https://moneysmart.gov.au/how-life-insurance-works/total-and-permanent-disability-tpd-insurance
Salary Continuance (income protection) cover - https://moneysmart.gov.au/how-life-insurance-works/income-protection-insurance
This information provides an overview of insurances available through super. If you would like a PictureWealth adviser to assist you in any way, do not hesitate to contact us.
Any general advice contained above does not take account of your personal objectives, financial situation and needs. You should consider the appropriateness of the advice in light of your own objectives, financial situation and needs before acting on the advice. You should also read the relevant Product Disclosure Statement and TMD before acquiring any product.
