Got a letter from your super fund lately?
Article courtesy of Berrill & Watson Lawyers
Hundreds of thousands of Australians will be getting letters from their superannuation funds in the next week telling them their insurance may be cut off.
By 1 December, super funds have to notify members with small accounts that their death and disability insurance cover will be cut off on 1 April 2020, unless they tell the fund they want it to continue.
Most super funds include death, total and permanent disability (TPD) and income protection insurance benefits. These benefits can be worth hundreds of thousands of dollars and save you and your family from welfare dependence.
If your account has less than $6,000 at all times between 1 November 2019 and 1 April 2020, you will lose that cover.
The only ways to keep the insurance cover going are to notify the fund or make a contribution or rollover to increase the account to $6,000.
This follows on from a change in July this year when super funds were forced to cut off insurance cover for inactive accounts.
Young workers under 25 will also not get insurance cover, unless they specifically ask for it.
If you are in a dangerous occupation, you still may get automatic cover, but you would need to check that with your super fund.
The reason for the changes is to protect super funds from being inappropriately eroded by fees, charges and insurance premiums.
If your insurance cover is cancelled and you later decide you want to take out cover again, you may have to fill in a health questionnaire and risk being refused cover, particularly if you have any existing health problem, such as MS.
None of the changes affect your rights to make a claim if you stop work (or die) before your insurance is cut off but you could lose valuable insurance cover for future events after 1 April 2020.
If you don’t get a letter by say early December, it would still be a good idea to check with your super fund because they may not have your current address or update details.
For most Australians, the only life and disability insurance cover they have is through their superannuation so it will be important to think carefully about whether to continue your cover.
Superannuation and insurance can be complex. If you have any questions, it’s important to get expert advice. Berrill & Watson Lawyers provide a free service to help you understand your rights and entitlements. Call us on 07 3166 9034 or visit our website at www.berrillwatson.com.au