The following update on insurance in super has been provided by Child Care Super, ACA's national superannuation partner. We initially ran this blog post late last year; we are running it again as the legislative changes it refers to come into effect next month. You can read about this partnership here.
The Government has made changes to superannuation which could have a major impact on people under 25.
The changes, which come into effect on 1 April 2020, aim to ensure that Australians' superannuation balances are not unnecessarily eroded by insurance premiums.
The new reforms mean that superannuation providers can only provide default death and total and permanent disablement (TPD) insurance on an 'opt-in' basis to members who are under 25 and begin to hold a new superannuation account from 1 April 2020; and members whose superannuation balance has not been $6,000 or more from 1 November 2019.
This means that super providers will be required to ‘turn off’ insurance cover on 1 April 2020 for members whose account balances have not been $6,000 or more from 1 November 2019 unless the member “opts in”.
Benefits of life insurance through your super
The benefits of insurance cover through super include:
• discounted bulk insurance rates for members;
• insurance premiums are deducted from your super account each month, not your take-home pay.
Child Care Super offers three types of insurance cover to protect you and your loved ones:
• Death (including Terminal Illness);
• Total and Permanent Disablement; and
• Income Protection cover.
Some things to consider:
• Do you have a partner or dependants who rely on your income?
• Do you need to pay your mortgage or any other debts such as, education, child care and living expenses?
If you do, and are affected by the changes, you may wish to keep your cover.
How to elect to keep your insurance cover
Child Care Super has been contacting affected members giving them the opportunity to keep their insurance cover – so remember to open any emails or letters you get from the Fund.
Your life insurance cover continues until it is turned off.
Your rights to be covered by insurance remain unaffected until the end of the period for which premiums have been charged or the expiry date of the term of your insurance contract.
Unsure whether to take action?
Child Care Super members have access to over the phone advice about their super, including advice on insurance, at no extra cost.
If you would like help, you can arrange an appointment by calling 1800 060 215.
You can follow Child Care Super on Facebook here.
Guild Trustee Services Pty Ltd. ABN 84 068 826 728. AFSL 233815. RSE License Number L0000611. Trustee for the Guild Retirement Fund ABN 22 599 554 834 (which includes Child Care Super). Before acting on any information, you should consider whether Child Care Super is right for you by reading the Product Disclosure Statement at childcaresuper.com.au.