September 10, 2014
I have insurance in my Super Fund, why do I need anything else?
There was a lot of hype and fanfare made recently about all super funds needing to have insurance covers as a compulsory addition.
This meant that anyone who has a Super Fund, particularly one that has been opened in recent years, should have a Life and TPD (Total and Permanent Disablement) insurance component attached to it and the more fortunate amongst us may even have a Salary Continuance (Income Protection) cover attached as well.
What I have found is that there is a major portion of the population who did not get the clear picture around this. A lot of people have made the perfectly natural error of assuming that Super funds that were in place at the time this new legislation was passed would have cover put in place where there was none previously. This DID NOT occur.
It needs to be understood that the legislation states that a minimum amount of insurance cover needs to be offered. Should members require higher amounts then these have to be applied for. The majority of funds offer default Life and TPD cover of $200,000 and Salary Continuance of $3,000 a month, (the equivalent of an annual income of $48,000) with a 30 day waiting period and a 2 year benefit period. This means you start getting paid after 2 months and after 2 years worth of payments everything ceases.
A few points to consider:
The latest Australian Bureau of Statistics report states that the average income in WA is just under $85,000, as you can see the default Salary Continuance amount is woefully short. AND what if you still need an income after the two years is up?
Insurances held in a number of Super funds is under Group Insurance cover and may not be Guaranteed Renewable which means that the cover could be withdrawn at any time.
Insurance in super is issued as a "one size fits all".
Each and every one of us has different financial needs, don't leave your future in the hands of a default one size fits all offering.
Talk to our Financial Advisor, for your personally tailored plan without delay.
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Rebecca Wilson, Loans Consultant
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