If you are under 25 years of age and/or have a minimal account balance through superannuation and you fall ill, get injured or have an accident, you probably don’t have insurance to assist you when you need it most.
Government changes were introduced to insurance within superannuation for low balance accounts and for new members under 25 years of age. These changes were introduced as a part of the legislative changes known as Putting Members’ Interests First.
These new rules aim to protect young members and members with minimal balances from having their superannuation eroded by fees for insurance premiums.
Up until October 2020, most young adults held insurance cover through superannuation. The recent government changes however have now switched off automatic insurance for the under 25s and low account balance holders.
The changes mean that all superannuation accounts with a balance below $6,000 or a member under the age of 25 years will no longer retain or be automatically provided superannuation insurance unless the member specifically “opts in” to the scheme.
Whilst there is certainly an economic advantage to this approach, allowing for young members and members with minimal balances to retain their superannuation it does leave a section of the community uninsured and economically vulnerable should injury or illness prevent them from engaging in the workforce.
Insurance claims through superannuation, including Total and Permanent Disablement (TPD) and income protection claims are often a lifeline to people who have become ill or injured and are unable to work. Without this insurance many of these members are now vulnerable should they find themselves in this position.
Whilst statistically it is less likely for a member under 25 years of age to need to bring such and insurance application, it is not inconceivable. Particularly in circumstances where a member is working in a higher risk employment role with a statistically greater chance of sustaining an injury because of this.
If you have sustained and injury or become ill and are unable to return to employment as a result of this, it is important to seek legal advice about your options. Particularly, to ascertain your level or insurance cover, if any, through superannuation.
Taking the time to consider your personal circumstances and seeking independent financial advice about the right insurance cover for you is important. Everyone’s circumstances are different – so the decision to opt in to insurance will depend on your personal and financial situation.