If you have insurance through your superannuation, make sure it’s right for you. This is especially important now that the stapling clause has been added to the new Your Future, Your Super Act.
Under the new rules, if you haven’t opted out of your superannuation fund’s insurance cover, your policy will automatically be renewed unless your fund receives instructions to the contrary. It’s essential that you know what you’re covered for and that you’re happy with the level of cover.
If you have a pre-existing condition, you need to ensure that your insurance is enough to cover your potential medical expenses. If your policy is automatically renewed, your insurance will stop when your fund gets a written request to exclude the pre-existing condition. This can be problematic if your current super doesn’t match your needs.
Here are the top reasons super coverage should not be taken for granted:
1. Lower Premiums
Because the fund purchases insurance in bulk, premiums are often lower. Additionally, premiums are cheaper because they are deducted from pre-tax income rather than post-tax income.
Further, there are usually fewer exclusions (for example, you may have fewer exclusions for pre-existing conditions), and those in place are often more generous. There may also be better overall benefits and policies, so you’re more likely to be covered after a severe accident.
2. Access to External Insurance Products
Some funds offer more coverage than other insurance products, such as income protection and trauma cover, but your fund might not offer these products as an option, or they might not be as affordable.
3. Consolidating All Your Cover
By having your insurance from your super, you can take advantage of the superannuation rounds (when your fund purchases a bulk policy from a single insurer) that occur every three to five years. You may be able to take advantage of these and consolidate your cover for your home, car, income protection cover and trauma cover.
4. Increased Flexibility
Many funds let you choose how much your insurance is pre-paid, post-paid, or based on your no-claims bonus. Additionally, if you change funds or retire, you can take your insurance with you.
5. Better Claims Handling
Claims handling procedures are often more streamlined than with external insurers. Most funds members of the Financial Services Council (FSC) will have to undergo strict due-diligence procedures and perform regular audits on their claims-handling procedures. External insurers often have a much higher claim ratio and a lower success rate in settling claims.
6. Financial Security
If you were to experience some injury or illness and could no longer work, having a disability policy through your superannuation can provide you with a regular income stream to supplement any Centrelink payments you might receive.
Should you need to claim on your superannuation policy, the process is quite simple. The only thing you’ll need to do is complete a claim form and return it to your fund.
Conclusion
After you’ve considered all of the reasons why you shouldn’t take your super for granted, it’s time to shift your perspective. By taking advantage of the financial security and peace of mind your cover can provide, you’ll not only be ensuring a safer future for yourself and your family, but you’ll also be ensuring a better quality of life.
New Wave Financial Planning is a dependable, dynamic, and forward-thinking Financial Advisory firm. Call us if you need any superannuation advice from Australia’s Gold Coast!
