National law firm Slater and Gordon is calling on Australian workers to check their superannuation insurance is right for them, ahead of further changes from the Federal Government.
Workers are set to have one default superannuation account that follows them from job to job thanks to the super stapling legislation which is due to kick in on 1 July if the proposed Your Future Your Super draft regulations get through parliament.
Slater and Gordon Practice Group Leader Sarah Snowden said the changes would stop workers paying multiple insurance premiums and account fees but may also have unintended consequences.
“Some total and permanent disability (TPD) and life insurance policies are industry or employer specific. A policy may exclude jobs deemed as hazardous based on working conditions, or offer benefits only to those employed in a specific industry meaning a person who moves into a different role could be ineligible to claim against their own policy after paying premiums if they are injured or ill while working in that role,” Ms Snowden said.
“People need to give serious consideration and check that their current super insurance policy is the right one for the type of work they are going to be doing going forward. New super accounts will no longer be created every time a worker changes jobs so injured workers won’t have the multiple insurance policies in multiple funds to rely on when making a claim as they have had previously.
“The speed of the proposed stapling legislation roll-out is concerning and allows little time for people to consider their options.”
Ms Snowden said the previous legislative changes that required members to opt in to keep insurance where they had a low balance, didn’t make regular contributions or were under 25, had resulted in many members no longer holding crucial income protection, total and permanent disability (TPD) or life insurance cover.
“People often overlook the fact they have insurance benefits they can access if they become ill or injured and can no longer work, within their super fund. It’s arguably the most cost effective and affordable insurance for people to have and it can be devastating to learn that you are no longer entitled to this insurance,” she said.
Ms Snowden said while it may be possible to have your insurance re-instated if you found it had lapsed, it needed to be done quickly.
“Depending on your fund and insurance policy, you usually have about 60 days to have your insurance reinstated if you find it has been cancelled, without having to do a medical check and re-apply. The problem is that by the time people realise, it is too late.” she said.
Ms Snowden also cautioned house hunters against using super funds to buy a home after the Federal Government announced its First Home Super Scheme would be expanded, allowing people to voluntarily add up to $50,000 to their super from next year, up from $30,000.
“It may allow you to save for a deposit sooner but it’s still going to be important not to let your balance get so low that you do not have the funds to pay your TPD or life insurance premiums,” she said.