Superannuation insurance is a type of insurance through superannuation funds in Australia. It provides financial protection for you and your family in the event of your death, total and permanent disability (TPD), or income loss due to illness or injury.
Your super account helps to ensure that you and your family have financial security if you are unable to work due to death, disability, or illness. Most super funds will offer some level of cover and default insurance if you die.
How To Choose the Right Superannuation Insurance for You?
Most super funds offer three types of insurance:
- Life insurance. This type of insurance pays a lump sum to your beneficiaries if you die. The amount of the lump sum will depend on the level of coverage you have chosen.
- TPD insurance. This permanent disablement cover pays a lump sum to you if you become totally and permanently disabled. The amount of the lump sum will depend on the level of coverage you have chosen.
- Income protection insurance. Income protection insurance pays you a monthly income if you are unable to work due to illness or injury. The amount of the monthly income will depend on the level of coverage you have chosen.
Superannuation insurance is generally offered as part of your super fund’s default settings. However, you can choose to opt out of it if you do not want to pay insurance premiums.
Most importantly, it is vital to compare the different policies available and choose one that is right for you and your family. You should also consider your financial situation and how much you can afford to pay in premiums.
Benefits of Superannuation Insurance
Here are some of the benefits of superannuation insurance in Australia:
- Financial security for you and your family. If you die, your beneficiaries will receive a lump sum payment that can help to pay for your funeral expenses and other insurance costs. If you become totally and permanently disabled, you will receive a lump sum payment that can help you to cover your living expenses. If you are unable to work due to illness or injury, income protection insurance can help you to replace your lost income.
- Tax benefits. The premiums you pay are tax-deductible. This means that you can reduce your taxable income by the amount of the premiums you pay.
- Peace of mind. Knowing that you have financial protection in place in the event of death, disability, or illness can give you peace of mind.
- Reach your retirement goals. If you have this insurance, you may be able to use the lump sum payment to boost your super balance and help you to reach your retirement goals.
- Protect your assets. Also, your assets will be protected in the event of your death or disability. This means that your family can inherit your assets and use them to support themselves.
- Reduce your risk. Superannuation insurance can help you to reduce your risk of financial hardship in the event of death, disability, or illness. This can give you peace of mind and allow you to focus on your recovery.
Common Misconceptions About Superannuation Insurance
Here are some of the most common misconceptions:
Misconception #1: Superannuation insurance is too expensive.
Fact: As we’ve mentioned above, the premiums you pay for the insurance are tax-deductible, which can save you money. Furthermore, its cost also depends on the level of coverage you choose, and your age. If you are young and healthy, you may be able to get affordable coverage.
Misconception #2: I don’t need superannuation insurance because I have life insurance outside of super.
Fact: Life insurance outside of super is not always portable, meaning that you may not be able to take it with you if you change jobs. This type of insurance, on the other hand, is portable, so you can take it with you no matter where you work.
Misconception #3: I don’t need insurance because I’m young and healthy.
Fact: Even if you are young and healthy, you can still suffer a serious illness or injury that could leave you unable to work. Thus, insurance can help to protect your financial security in the event of an unexpected event.
Remember, superannuation insurance is not a one-size-fits-all product. Hence, the level of coverage you need will depend on your circumstances. If you are trying to decide whether this kind of insurance is right for you, it is a good idea to speak to a financial adviser. Most importantly, they can help you to assess your individual needs and recommend a policy that is right for you.
Tips for Choosing the Perfect Type of Superannuation Insurance for You
Here are some additional tips for choosing insurance through Super:
- Compare different policies.
There are several different insurance policies through super that are available, so it is important to compare them before you buy one. Compare the level of coverage, premiums, and terms and conditions of different policies to find the best one for you.
- Consider your circumstances.
It is essential to consider your circumstances. This includes considering factors such as:
- your age,
- health,
- financial situation, and
- family commitments.
- Get advice from a financial adviser.
If you are trying to decide whether insurance through super is right for you or which policy is right for you, it is a good idea to get advice from a financial adviser.
What Happens to Superannuation Insurance When You Change Jobs?
When an individual changes jobs in Australia, their superannuation insurance coverage may be affected. This means that their insurance will generally be transferred to your new super fund. However, there are a few things to keep in mind:
- Your new super fund may not offer the same level of insurance cover as your old super fund. If this is the case, you may need to choose a different level of coverage or purchase additional insurance.
- Your premiums may change. The premiums you pay will depend on the level of coverage you choose and your age. If you are moving to a new super fund, your premiums may change.
- Your waiting periods may reset. Some policies have waiting periods before you can claim benefits. If you change jobs, your waiting periods may reset. In effect, you may have to wait longer before you can claim benefits if you become sick or injured.
Getting Help From Insurance Lawyers
Insurance lawyers are legal professionals who specialise in insurance law. They can provide valuable assistance in navigating the complex process of making a superannuation insurance claim. Here are some ways insurance lawyers can help:
- Interpretation of policy documents
- Assistance with life cover and death cover claims and income protection cover
- Representing clients in disputes
- Expertise in insurance law
- Help get your super fund’s annual statement
JB Solicitors has a team of lawyers who can be a valuable resource for individuals dealing with superannuation insurance claims in Australia. We can provide expert advice and assistance to navigate the complex claims process and ensure that clients receive the benefits they are entitled to under their policy.
Do you want to know how much cover you need or how much insurance you can avail? What if you want to know if you can receive automatic insurance?
Contact us now.
