Many superannuation fund members will have valuable TPD and death insurance switched off on 1 April 2020 unless they tell their fund they want to continue the cover.
If you have a superannuation account with less than $6,000 in it, your insurance will be cancelled unless you contact the fund and continue the cover before 1 April.
Most superannuation funds provide automatic or default insurance cover for death, Total and Permanent Disability (TPD) and perhaps income protection.
The super fund takes out a group insurance policy on behalf of the members and the premiums are paid by deduction from the superannuation contributions paid into the fund or from the account balance.
The cover is generally cheaper than private insurance and granted without filling in a health questionnaire.
Why is this happening?
In 2019 the Federal Government introduced laws which cut off insurance from superannuation accounts that had no contributions for 16 months, unless members notified their funds to continue the cover by 30 June 2019.
They did this to stop superannuation accounts being eroded by unnecessary insurance policies and premiums.
More changes were introduced later in 2019 so that workers under 25 and new accounts under $6,000 will no longer have default insurance when workers join a superannuation fund from April 2020.
A dangerous occupations exception might apply to some funds, and contributions can be added to tip the account over $6,000.
If you have already stopped work because of injury or illness you might still have a claim but if you work after the end of March, you may lose your cover.
Those with existing super funds up to $6,000 were supposed to get a letter by 1 December 2019 telling them they have until 1 April 2020 to opt to continue their cover.
The problem is that many people may not have got that letter because they changed address, were overseas or had Australia Post problems.
What to do to continue your insurance
If you have any doubts or if you want to continue your insurance cover, you should contact your super fund(s) as soon as possible.
Most super funds allow you to notify them online.
If you aren’t sure what super or insurance you might have or whether you should continue your cover, get advice.
You can contact Berrill & Watson on 03 94488048 or [email protected] for free advice.