Superannuation and TPD claims by Adam Tayler
Thursday, 25 July 2013
CS 21 to 2. Now most of us have some sort of insurance cover through our superannuation funds. You could already be protected for total and permanent disability, accident and trauma. You might have life insurance, income protection, which could be a great peace of mind for you. But a lot of us have Super have scattered all over the place. Now I did. I don’t now but I did and you may, have it all over the joint. What do you do if you try and merge it into one fund? How do you work out which fund it should move to? And what about access the Super account balance earlier than retirement age, if you’re permanently injured? To answer all of these questions and to take your questions, 131873, from Turner Freeman Lawyers, our sponsors of the segment, Legal Matters, Adam Taylor is on the line from Queensland. Adam, good afternoon.
AT Good afternoon Chris.
CS A stack to talk about. Total and permanent disability, income protection, life insurance, accident and trauma. First of all, I bet that most people wouldn’t know of those, what they’re covered for through their insurance policy, or through their superannuation policy I mean.
AT And Chris I think you’d win that bet. My experience is that a lot of people don’t even know they have any insurance attached to their superannuation, let alone what style of insurance it is.
CS And how does it usually work…say, in a standard policy with AMP, what would a standard policy present to you in terms of insurances?
AT Normally, someone working in a particular industry will have a group policy, which covers them for total and permanent disablement and, in some circumstances, also income protection if you’re temporarily disabled.
CS Right, and yet you’ve got insurance companies hassling you frequently to take up income protection. And many people might do that, but they may be covered nonetheless through the superannuation they currently hold?
AT It’s worth comparing. There are differing products and costs and premiums out there but superannuation is an area that people, firstly, sometimes don’t even realise that they have any insurance attached to and then can compare that properly to the private products out there, they might be surprised.
CS What’s the easiest way to find out whether we have multiple superannuation accounts that we’ve forgotten about?
AT The best thing to do is to contact the Australian Tax Office and do a lost Super search. That will reveal any superannuation that’s been paid to the Tax Office because the Super fund has lost contact with you.
CS It’s surprising how many accounts people lose trace of or lose track of. And maybe that’s because that in a lifetime now, as opposed to previous generations, we do work in different workplaces, don’t we?
AT We’re a more flexible workforce these days and a more casual workforce and I think people, throughout their working career, will certainly undertake many different jobs and sometimes many different roles in different industries. And all of those industries have their own superannuation funds. I think this problem is diminishing now with the choice that employees have as to where their superannuation goes. In days gone by, people would routinely simply follow the employers’ set up and sometimes that was more than adequate. These days, people have more choice about where they put their Super.
CS And will go with other options. Alright, let’s go to a couple of callers before we talk about other aspects of today’s topic. Linda, go ahead, Adam is listening.
C1 Oh hello Adam. I’m just wondering is this the total and permanent disability insurance with the superannuation, am I covered even though if I try and apply for total and permanent disability outside of superannuation they won’t cover me because I’ve had cancer?
AT Generally, the TPD coverage you get through Super is that you don’t have to go through any health qualifications or questionnaires which is what you do with a private insurance policy so you will get a minimum level of cover through your Super no matter what your history is.
C1 Oh ok.
AT If you want to increase that cover then normally there’s a requirement to go through some sort of screening which may then exclude pre-existing injuries, all sorts of things.
C1 Yeah, ok. So they won’t ask any questions…you know, if something happens, like say sickness and accident, you’re still covered even though you’ve had that pre-existing…?
AT That’s correct. I mean every policy is different. I have come across policies where they do exclude pre-existing conditions absolute. But there are somewhere a pre-existing condition that’s less than, you know, 2 years old might be excluded but something older than that might be ok. It just depends on your particular fund and the particular insurance policy that they have.
C1 Ok, so it might be worth asking the question anyway?
AT Absolutely, yes.
C1 Ok, excellent.
CS Good on you Linda, thank you very much for your call. Just off the back of what Linda had to ask you, women in particular, according to the statistics, are at a great disadvantage when it comes to superannuation aren’t the?
AT They are and I think recent studies are showing that it’s not simply about the choices that women are making or whether they’re the primary caregiver or not, it’s certainly a problem with the disparity in salary and it means that women who are getting less than men are ending up with less in superannuation.
CS Women, on average, earn between 44% and 88% of the superannuation of a male earning the average wage, which means if they do reach retirement or if they are in a situation where the family split, they’ve got to be very careful about how much they’ve contributed to superannuation.
AT That’s absolutely correct. These days, it just doesn’t matter when you’re male, female, caregiver or not, it really comes down to salary. Superannuation is linked to salary and if that’s creating unfair results then I think that’s something that needs to be looked at.
CS Ok, Kevin, go ahead, Adam is listening.
C2 Adam, how are you?
AT Good thanks Kevin. How are you?
C2 Good thanks. Do you know about this trio levy?
AT Trio levy?
AT No, I haven’t come across that.
C2 Bill Shorten announced this basically it’s a $55 million grant to the victims of the Trio collapse which will be recouped by APRA as a levy on superannuation funds. So, in other words, incompetent regulation results in the Government putting their hand into most people’s superannuation funds.
AT I think the problem we’re seeing these days is that governments are tinkering with superannuation and, you know, you read the papers in the last couple of days, they’re thinking about doing it again to plug holes elsewhere. That’s not what superannuation’s designed for and I think that uncertainty creates issues. Not only for those nearing retirement but for those at the beginning of their careers who are choosing what they should do with superannuation and how they should deal with them.
C2 Well, that’s one of the problems is most young people don’t actually take much interest in their Super. I have a great deal of difficulty trying to convince my children to get all of their money into at least just one fund and one lot of management fees.
AT That’s right and you’ll find that, with multiple funds, you also have multiple insurance policies and you’re therefore paying multiple numbers of premiums as well so you’re actually throwing money away by having multiple funds.
C2 Yeah, absolutely mad, you know, in terms of things and because the management fees if you’ve only got one fund are definitely a lot more reasonable than having half a dozen funds.
AT Exactly right and fees do differ greatly between funds so it’s worth shopping around.
CS Ok, Kevin, thank you for your call. I’ve got to take a quick break, we’ll be back with you in a second Adam Taylor, from Turner Freeman, our sponsors of the Legal Matters segment. We’re talking superannuation this afternoon. It’s 12 to 2.
131873 Tracey, go right ahead, Adam Taylor from Turner Freeman is listening.
C3 Yeah, hi Adam, it’s Tracey here.
AT Hi Tracey.
C3 Adam, I’ve got about six different Super funds.
C3 Yeah, and I’m very confused as to how to roll them into one and which one to roll into. I’ve been ringing around and a couple of them I’ve got death and total permanent disability in the fund and a few others, I don’t have that and I’d just like to state that I haven’t worked for two and a half years, I’m suffering major depression and I’m starting to get financial difficulty and I’m just wondering how I go about doing something about it?
AT I think what the first thing you need to look at is what is total and permanent disablement and do you qualify for that in your specific circumstances? Total and permanent disablement can be a misleading term. What it essentially means, in most policies, is that you can’t go back to your usual occupation or any other job for which you’re reasonably qualified at the time you become disabled. Now, your policies may also come with some sort of income protection. So if your situation is uncertain, so you don’t know if the depression is going to be a long standing or permanent thing, then temporarily whilst you’re off work in these years, you could be accessing income protection so I think the first thing you need to do is to have a look at, what is the coverage and what can you get out of that. Now, with your multiple accounts, you might find that you are in the position where you can actually make multiple claims. If you are totally and permanently disabled, or you are temporarily disabled from work because of an injury or illness, then each of those particular insurance policies might respond. It just depends on a couple of different things. One is when you last worked, which policy was current at that time and, again, the particular terms and conditions of that fund.
AT The initial question you had about how do you go about consolidating these things. I think it’s something you do need to get some financial advice on and examine what are the benefits available to you under each policy, you’ve also got to look at investment performance as well, that’s an important thing when it comes to Super and you need some advice to do that from either a financial advisor or someone who knows that field and make a comparison as to the fees being paid, the premiums and what you’re getting in the insurance and making a choice there informed by your advice.
C3 How much do they normally charge do you know?
AT Financial advisors?
AT Look, I don’t. It varies a lot and if you’ve…I mean, for example, some banks will offer it free of charge. So you can go there, get a comparison done of your Super policies and they will give you that advice without any cost. There are others out there that will charge a fee to do it so it just all depends. It’s worth looking around at places you perhaps may not think that you might be able to get finance from. In fact, some Super funds themselves will provide you with some independent financial advice so that might be another benefit that’s attached to your Super account.
CS Ok Tracey, I’ve got to leave it there. Thank you so much for your call. Six super funds…is that normal Adam?
AT Look it’s not unusual. I’ve seen a lot, yeah. It’s just, as we were saying before, the nature of our mobile workplace these days.
CS Yeah, exactly. You’ve been very informative and there are so many realms to investigate when it comes to superannuation but at least we’ve covered off a few points today. Thank you for your time.
AT Thanks Chris.
CS Alright, Legal Matters, brought to you by Turner Freeman and that’s Adam Taylor from Turner Freeman Lawyers.