In every action movie, there is often a scene where someone is taking a risk to do some crazy stunt. During this moment what comes to our mind, mostly is “wow, I hope this person has insurance” (well most of the time). It’s true that, just like action heroes we need to cover ourselves in order to protect our families, have cover for our businesses and cover our death if it calls for it. With this in mind, here are a few tips about why taking insurance through your super can be riskier than a Bruce Willis action movie.
Like everything in life though there is no such thing as a free feed, holding insurance through your super can be risky and here is why:
- Insurance through your super offers a basic level of cover but there are certain pitfalls holding it inside of your super. If you don’t have your beneficiaries specified, then the Superfund has control and will determine who receives the payout.
- Some insurance through super will lapse if you stop working for a while, so this means you could be left uninsured if you are injured or ill and need to claim.
- The insurance premium payments are deducted from your super, which means you will have less in your super when you come to retire. So putting money back into super to help top it up could be an option. Or, paying for your insurance premiums personally so that your super fund doesn’t and you end up with more at retirement.
- If you make a claim on your insurance held through super, the insurance claim money will be paid into your super fund, but it then the Superfund trustee who decides if the money will be paid out to you. In certain instances, they can decide not to pay it to you and leave it in your super, so you won’t be able to have access to it until age 60 or 65.
- Insurance claims processed through your super can be slower for your family and this can cause financial difficulties for family members.