Changes to Superannuation – You May No Longer Be Insured!
For many Australian’s, if the worst was to happen in life, they were often covered by insurance policies attached to their superannuation fund, most commonly coverage for Life Insurance and Total and Permanent Disability (“TPD”) (to learn more about what TPD is, you can read our earlier blog here: https://www.shawbunner.com.au/blog-1/2018/12/14/what-is-total-and-permanent-disability-tpd-cover )
Moreover, a person may have an income protection policy attached to their fund. These policies often prove invaluable for people if they have unfortunately events occur in life.
From 1 July 2019, anyone who has an ‘inactive’ super account and in particular, a super account that has received no contributions for 16 months or more, are likely to lose their default insurance cover. In other words, if your superannuation account has not had any contributions either by you or your employer for a continuous period of 16 months then your default insurance coverage will be cancelled. This will occur irrespective of the balance in your super account.
The changes flow from the Government’s ‘Protection Your Super’ package and is designed to protect Australian’s retirement saving by preventing members from paying unnecessary fees and insurance premiums.
On the other hand, there is a concern that people holding these accounts could potentially lose their insurances, including Life Insurance and TPD cover, unless they have contacted their super fund.
The Association of Superannuation Funds of Australia (ASFA) anticipates that more than three million Australian’s may be affected as a result of the changes.
Take the time to contact your super fund/s today to see whether your insurance policies will be impacted by the changes. If so, you should speak to your fund about electing to opt-in to the default insurance irrespective of your account being ‘inactive’. You may also wish to consider putting in your own contribution which will re-activate the account for a further 16 months.
It is important that you understand what insurances you have in place. If you need to discuss your level of insurance, contact your super fund, a financial adviser or insurance broker to discuss your personal insurances.
You can find further information at: https://timetocheck.com.au/