My super provider withdrew cover when I turned 65.
Apparently standard practice. I’m not sure if being full time employed was a prerequisite. It was not expensive relative to other options.
I never understood the need for disability or death insurance - just claim your super early in the case of disability, and leave your super to your dependants/estate at your death. Or am I missing something?
Life insurance as a part of super was a reasonably cheap way of getting it, and for most workers, the employer paid for it via the SGC.
Young people may have very little accumulated super, but a greater need for life insurance. Young kids, mortgage on a home, rent to be paid, loans to be paid off, etc.
On the other hand, TPD in super, was and still is, a somewhat dubious benefit given the raft of conditions that apply. At least with life insurance it is very clear cut.
I guess my life hasn’t been typical - I didn’t have a child until I was 37 (and therefore no need for life insurance), by which time I had plenty of super and the mortgage was paid off. And even though the birth disabled me, I claimed disability support pension from Centrelink until I could claw my way back into the workforce part time. So my super remains intact and I’m about to claim some of it in 2 months time.
Now to be blunt, life insurance is not about the policy holder who pays the premiums. Once you are dead, it is all about providing money to support those who were dependent financially on you.
If there are no dependents, then no need at all for life insurance.
If a super balance has built up, then that super will go to dependents typically as adjudged by the trustees and may well be more than the life insurance payout anyway. Just a bit of icing on the cake.
In my case, I cancelled the super life insurance as soon as all of my familiy members were no longer financially dependent on me. For anything.
I have written to my superannuation provider about this but for young people! I think young people aren’t well looked after, at least they aren’t by my fund.
For context, I’m at the beginning of my career, with no kids, but I have a mortgage and an above-average super balance for my age. So Life Insurance (paid out upon death) isn’t a huge priority but I am very interested in good income protection insurance and total and permanent disability insurance.
I wanted to increase my income protection and total and permanent disability insurance. But my superannuation company wouldn’t let me be insured for a greater TPD value than my life insurance value. Is that normal/standard to all superannuation funds or insurance providers?
Even though their online calculator told me I was under insured for TPD, they wouldn’t let me increase my cover without also substantially increasing my death cover to a point where I was ludicrously over insured. I couldn’t justify that cost.
I haven’t finished researching to find a better deal, so I haven’t cancelled my super-included insurance yet but I am close to doing so. I think the super insurance options should be more flexible to make sure that, as you say, insurance in super works for all Australians.
TPD is just a component of your overall life insurance policy. TPD is designed to payout your life insurance value (or part of it) in the event that you suffer a TPD covered situation as distinct from a death event. Some offers increase the value of the TPD in some specific circumstances but this payout would not usually exceed the total value of your insurance policy.
If an insured person wishes to cover themselves for a greater TPD amount, this means the life insurance policy amount needs to be increased to cover that new amount. This TPD coverage also sometimes requires the payment of an additional policy amount to activate the TPD protection and some policies have the protection built in with no extra payment required. As you age and your Super value increases the amount of insurance and thus TPD coverage may decrease until such time it is of little benefit to maintain the insurance coverage.
As circumstances are individual in nature (all our needs differ), it is important that you seek advice that meets your needs. I am not a lawyer or financial consultant and so my advice is purely as a user of this type of protection, in my case it ensured I receive a reasonable pension from my Super for the rest of my life. You probably should and I would highly recommend that you consult a licenced and good financial consultant to properly assess your coverage needs.
last week I went to my Super company to do a restart. My life insurance has been in my super account since I started in 1990. I am now 67 years old. He asked if I wanted to continue my life insurance ( Less than $3.00 /week) for the current value of $12000 death cover. My understanding is that this cover is only available until I reach 70. Also, with each passing year, I will have less death cover. In addition, it is a continuation of my existing policy. Once I cancel the insurance, I can’t restart the life component again.
That’s how life insurance works. Life insurance is about providing cover for any liabilities on one’s death. Traditionally when one gets older, liabilities diminish and hence why the amount of cover also diminishes. Usually when one is a senior, they don’t have any liabilities and such life insurance no longer makes sense.
Many super life insurance policies are only valid if the person covered works. One one stops working and concessional super contributions are no longer received by the fund, the life insurance policy is terminated.
I would be surprised at that. You are not working for a while, so employer contributions no longer being added and the life insurance cancelled? No way.
The premiums just keep being taken out of the super balance until you tell the fund to cancel the insurance policy.
Some funds allow premiums to be continued to be paid from super funds, but this is an opt in by the super account holder.
When concessional super contributions cease, after a short period of inactivity life insurance cover is automatically terminated if one doesn’t contact their super fund and opt in to paying premiums from super balance.
One thing to watch is some other insurances are based on income bring received, such as TPD or income protection. One needs to ensure they don’t continue such insurances if they have become ‘junk’ insurance because income is no longer being earned.
Each individual has different circumstances. For life insurance through super, at 70 years there is no longer any coverage. One needs to check their own insurance to ensure 70 year maximum age also applies to them coverage.
Life insurance isn’t about building a nest egg, it is about insuring against risk of leaving liabilities which can impact on spouses or descendants. It is worth noting that some traditional, out of super, life insurance have residual value at policy termination. This can be withdrawn by the policyholder.
Anyone who plans to work beyond the retirement age should seek professional advice as there can be broader implications to their financial circumstances than in super insurances.
That is way too simplistic. The ‘short’ period has to be at least 16 months. The super fund has to try to notify the account holder before taking any action. The account holder can make non-concessionary contributions. The account holder can choose to rollover the super into another fund. Or they can simply choose to tell the fund to continue the insurance despite no employer contributions coming in.
If none of the above happens, then the super account is considered an orphan and the insurance stops.
