Think your super is just for retirement, think again!

Many people assume their superannuation fund is only there to prepare them for retirement, but this isn’t always the case. Most super funds also offer insurance, such as income protection, total and permanent disability (TPD) or life insurance. As the National Head of Superannuation and Insurance Claims at Maurice Blackburn Lawyers, I’ve come across many clients who didn’t even realise their super offered cover.

If you fall into this category, allow me to give you a crash course on super insurance.

Depending on your superannuation fund, your cover may vary from basic life insurance to complete income protection and terminal illness benefits.

The three most common types of super cover include:

  • income protection – any lost income is covered for a certain period if you’re unable to work due to illness or disability
  • TPD – you are covered in the event you become seriously disabled and are unable to work again
  • life cover – your beneficiaries are paid a benefit in the event of your death.

If you’re unsure what insurance policy your super offers, you should speak to your provider to find out exactly what you are and aren't covered for. If you’re thinking about selecting a new super fund, speak with a financial planner first to make sure you’re making the right choice for your circumstances.

Be wary of default employer super funds


When you’re starting a new job, it’s important to research your employer's recommended super fund to make sure it offers an appropriate level of insurance. If it doesn't, you may be better off sticking with your existing fund instead of having multiple super accounts. You need to be aware that you have a choice when it comes to your super fund and you don’t have to go with the one used by your employer.

To put the weight of this decision into perspective for you: we had a client who worked in the mining industry on a fixed-term contract. He joined the default super fund suggested by his employer, but when he developed a serious back injury and couldn’t continue work, his TPD claim was denied.

This was because the insurance offered by his employer’s super didn’t cover fixed-term contracts, meaning he was never going to receive a benefit from his claim even though he was paying the insurance premiums. This is just one reason why it's important to read the fine print of your employer’s super policy before signing up.

If you’ve had four or five jobs in different industries, you may also have a number of funds. This can be hard to keep track of, as they may offer varying levels of insurance. You might want to consider rolling all of your funds into a single account so you only have to pay administration fees for one. Before you do, make sure you consider the pros and cons of consolidating your superannuation [Link to 'What to consider before consolidating your super'.

Benefits of being covered by your super


One of the main benefits of super insurance is that it’s not subject to individual medical checks to qualify. When you purchase retail insurance, for instance, you run the risk of being rejected because of a pre-existing illness or disability. However, when you receive super cover, any pre-existing conditions are usually covered.

Super insurance is also far cheaper than insurance purchased in the retail space, as super funds purchase insurance policies in bulk. If your policy only offers basic cover, you can purchase extra units of cover. But these may be subject to medical examinations to qualify.

What you need to consider when choosing your super

There are a few key things to consider before deciding which super insurance is suitable for you and your family. This includes your:

  • age
  • occupation
  • family situation
  • existing debt

If you have dependants who rely on your income, for example, and you work in a high-risk occupation, it’s crucial to find a level of insurance that can cover any loss of income as a result of an injury or accident. If the unthinkable happens and you die as a result of an accident, you also want to make sure your dependants are covered to manage any debt left behind, such as a mortgage.

Make sure you read the fine print

I’ve come across many situations where clients are covered by what is known as ‘junk insurance’ – policies that contain strict conditions in the fine print that dictate when they’ll pay out a benefit. For example, if you’re a casual who works less than 30 hours a week, you may see policy eligibility rules which state you won’t have TPD cover unless you meet what they term ‘active employment provision'.

This means you'll need medical evidence to prove you still had the capacity to work 30 hours or more if your illness or injury didn't prevent you from working the minimum 30 hours a week.

This speaks to the importance of having a lawyer to help you navigate such unpleasant processes. People going at it alone can be put off even making a claim when they don’t know their fund's eligibility rules. An experienced superannuation lawyer can help make all the difference, and give you peace of mind that your claim is in reliable hands.

Find out more about superannuation insurance cover today.

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Kim Shaw

Maurice Blackburn Melbourne
Kim Shaw is an accredited personal injury specialist practising in superannuation and insurance claims in Maurice Blackburn’s Melbourne office. She was named the Lawyers Weekly Partner of the Year for Insurance in 2018. Kim has been with Maurice Blackburn since 1991 when she finished ...

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