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Making sure you’re getting the best deal on insurance without missing out on the cover you need can feel like a minefield. Get to know where and how to buy.
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Is your insurance cover in super enough? If you’re looking at ways to get protected, Josh from the IOOF team has some friendly advice to help you out.
There’s no two ways about it; insurance can be pretty dull. Reading through a product disclosure statement is unlikely to excite you, but taking the time to understand your options can definitely pay off. So keep reading and try not to nod off!
One way to get insurance is through your super fund. The insurance cover is added to your account and premiums are paid straight from your super balance. Your super fund will usually offer you Total and Permanent Disability (TPD) cover and Life cover (also known as Death cover) as well as Income Protection, that could cover you, if you are temporary disabled through illness or injury. Sometimes your fund may even add them automatically, which could mean you may have insurance cover without even knowing it. Income protection for loss of income is usually an optional add on.
Find out more about the different types of cover available
Like with most of your money choices, there are pros and cons of going through your super fund for insurance.
It’s pretty likely that you have more than one super account. It’s so common in fact, that there have been campaigns by the ATO to find your lost super. The most important thing to know about insurance within super, is that your cover can stop if your account becomes inactive.
Let’s say you change super funds and stop contributing to your old account. Super funds are required by law to cancel all insurance on accounts that haven’t received a contribution or rollover within16 months. It helps save your inactive account from dwindling away through insurance fees, but it means you could be under insured if you don’t stay on top of things. The good news is that you can fill out a single form to tell your fund not to cancel your cover – but you must do this before reaching 16 months.
Of course you don’t have to go through your super fund for insurance. You’ve got two other options:
If you’ve got questions about insurance in your super, you can get help from our team.
Find a financial adviser near me.
The best way to check what you already have and don’t have, is to log into your online account or call your super fund. Your super annual statement and Product Disclosure Statement (PDS) may have information on the type and amount of cover you have, when it will pay out and how much your monthly premiums are. If you have more than one super fund, get onto this pronto. You might be paying double, triple of more than you need to on insurance fees.
If you haven’t got insurance, ask your super fund it they have an online calculator to help you work out what your premiums would be.
It’s a good idea to review insurance cover every year and particularly when your circumstances change. You’ll want to make sure the numbers still stack up.
Like most things, the more you put in, the more you get out. Take the time to explore your options and understand what you’re getting for your money. Your future self will thank you for it.
You can’t get critical illness (trauma) cover through your super fund. You’ll need to look outside of super for that.
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