Australians have one month to check the insurance in their superannuation ahead of potential changes that experts are warning could leave some underinsured.
As of 1 July, workers will have one default superannuation account that is ‘stapled’ to them and which will follow them from job to job, provided the legislation becomes law.
While the change is designed to prevent savers from paying multiple sets of super and insurance fees, Slater and Gordon practice group leader Sarah Snowden said it could have unintended consequences.
She said previous super and insurance changes have gone largely unnoticed by Australia’s savers with devastating results.
As of April 2020, super companies couldn’t automatically add insurance to new members’ products if they were younger than 25 or if they had less than $6,000 in their account.
“I had a young guy who is now a paraplegic, but because he was under 25 and didn't opt in to his insurance when the legislative changes came through last time, he no longer has a lump sum benefit,” Snowden said.
“He was injured in circumstances that aren't otherwise compensable, so no workers' compensation...he's going to be reliant on the NDIS and the disability support pension with no lump sum to support him.”
Now, Snowden is worried super savers will lose out due to the new stapling provision.
“My biggest concern is that people are so disengaged with it that these rollouts will happen and people still won't know that the product or the super fund that got attached to them is the right option.”
What do Australians need to know about their super insurance?
Snowden said now is the time for savers to “double check everything”.
Some super insurance policies will be better suited to some forms of work, while others may have different payment plans. For example, some total and permanent disability and life insurance policies will be industry or employer specific.
Other policies may exclude jobs that are considered hazardous.
If a saver has multiple accounts, it’s worth comparing each insurance policy before deciding to consolidate.
That’s especially true for savers who may already be eligible for an insurance payout. Snowden said she has seen too many people consolidate their super before realising they could have been entitled to money from a policy they’d since closed.
And if they have large sums of money in different accounts, seeking financial advice might also be a good idea, she added.
What if I think my insurance has already been cancelled?
The first step is to contact your super fund, either over the phone or online.
Then, it’s a matter of either emailing or confirming over the phone that you wish to opt in to the insurance, Snowden said.
Most funds will allow savers around 60 days to reinstate the insurance in their super, should they choose to do so.
After that period, savers may need to undergo a medical check and re-apply.