If you’re anything like most people, chances are that any letters or statements from your super fund immediately go either in the bin or in a non-urgent pile of mail to be dealt with at a later time.
However, hidden in among those letters rests something very important, that has the potential to significantly affect your income in the future.
Commencing on 1 July 2019, new legislation known as the Protecting Your Superannuation Package will come into force.
In a nut-shell, this legislation is there to help protect your super balance, by means of reducing unnecessary fees, especially for low balance accounts.
However, there’s a catch.
The legislation states that unless you contact your super fund to instruct otherwise, any super accounts with a balance under $6,000 are to be closed, and any insurance policies cancelled if your fund has a balance of less than $6,000 or hasn’t received any contributions or rollovers in the past 16 months.
What does this mean?
It means that if since 1 March 2018 you have been:
– Self employed (and probably not paying yourself super, tsk tsk)
– Casually employed (and earning under $450 a month)
– Unemployed or on maternity leave
Your insurance policies in your super accounts will be cancelled on 1 July 2019, unless you act.
Hang on, insurance, what insurance?
That’s right. Without you realising it, when you (or your employer) opened your super account, most likely you will have been signed up to one or more life insurance policies, known as Life, Total and Permanent Disability and Income Protection (or Salary Continuance) insurance. These policies would pay you and your family either a lump sum or ongoing payment (in place of your salary) if you die or are temporarily or permanently unable to work due to medical reasons.
I don’t need insurance, I’m young and healthy!
That may be so, but you also may not be eligible for cover in a new policy, and not be aware of it.
– Have you suffered from symptoms of depression or anxiety (regardless of whether you have received treatment or medication for it)?
– Have you seen a psychologist or councillor to help to help you navigate through a traumatic life event or a relationship breakdown?
– Have you undergone genetic testing to assess your risk of cancer?
– Have you suffered from Post-natal depression?
– Are you taking any medications?
– Have you, perhaps for preventative reasons, been receiving acupuncture, chiropractic treatment, remedial massage, naturopathy or any other treatments?
– Maybe as a working parent you have (understandably) complained to your GP about feeling tired and run down?
Without you realising it, insurance companies may view such events as signs of a pre-existing condition and refuse to offer you cover (or pay your claim) in the future. In this case, it is absolutely crucial that you preserve the insurance policies that you currently have.
So what should you do?
Step 1. Link your myGov account to the ATO and do a search for lost super.
Step 2: Contact your super fund(s) to find out what insurance you currently have.
Step 3. Instruct your fund in writing that you do not wish to have your insurance cancelled at this time (or make a contribution into your super account)
Step 4. Conduct a full review of your insurances to make sure you are adequately covered. I strongly suggest getting professional assistance in this regard, and if taking out new cover, getting one that offers upfront medical assessments.
Step 5. Decide whether you need to keep your existing super insurance and if not, advise the fund to cancel it.
If you would like to understand more about how life insurance policies in super work and how to know if you have enough, check out my new book Wonder Woman’s Guide to Money (available in paperback and Kindle editions)
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The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.
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