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Insurance and inactive member accounts

DID YOU KNOW YOU HAVE INSURANCE THROUGH YOUR SUPER ACCOUNT?

As of 1 October 2012, everyone with a MySuper account was automatically opted into Life and Total and Permanent Disability (TPD) insurance as part of the Federal Government’s Stronger Super reforms. This was introduced by the Government to tackle the problem of many Australians not having suitable cover in the case of injury, serious illness or death.

Insurance through super means that 13.5 million Australians, like yourself, have peace of mind knowing that if the worst were to happen you have some protection in place.

I want to keep my insurance in super

Important changes to insurance inside super 

Federal Government legislation introduced on 1 July 2019 means that super members whose accounts have not received a contribution or a rollover (i.e. have been inactive) for 16 months could lose their insurance in super.

The Treasury Laws Amendment (Protecting Your Superannuation Package) Regulations 2019 have been brought in to make sure that:

  • arrangements for insurance in super are appropriate, and
  • members are not paying for insurance that they do not know about or paying premiums that inappropriately erode their retirement savings.

As a result, we will need to cancel your First Super insurance cover if your account has been inactive for 16 months.

You will receive a communication from us:

  • if your insurance could be cancelled within the next four weeks, OR
  • if you are at risk of being impacted in the near future because your account has been inactive for 9 months or more.

How do I keep my insurance?

If you want to stay protected and keep your automatic level of insurance with First Super, the good news is that you’re in control. You can elect to stop your insurance from being cancelled, but you need to let us know before the cancellation date.

You can keep your cover by:

  • returning the opt-in form enclosed with the letter we send you
  • completing the online opt-in form; or
  • making a contribution to your account, which will make it active again.

Click this button to opt in now (it’s an easy two-minute process):

I want to keep my insurance in super
Still uncertain? We’re here to help. Get in touch with our Member Services Team on 1300 360 988 or mail@firstsuper.com.au

If we don’t hear from you or receive a contribution, your First Super insurance cover will stop on the given cancellation date.

What cover do I have?

When you joined First Super, you automatically received a ‘default’ level of cover for Death and Total and Permanent Disablement (TPD). The level of default cover you receive depends on your age and employment type. Full details can be found in our Insurance Guide.

If you are not sure what insurance you have or how much cover you have, it’s detailed on your Annual Member Statement. Alternatively, you can check by calling our Member Services Team on 1300 360 988 or logging into your firstonline account.

Here’s a breakdown of the protection most members have through their First Super account:

  • 4 units of Total and Permanent Disablement cover
    This type of insurance pays you a lump sum if you become seriously disabled and are unlikely to ever work again. It can be used for your ongoing bills (such as mortgages and living expenses) and for your medical expenses.
  • 4 units of Death cover
    This type of insurance is for the benefit of your family or any dependants who will receive it when you die. It can be used for your debts, paying towards your funeral, or to help your family pay the bills that keep coming in.

Members aged 34 and under have $200,000 of cover. This amount reduces from age 35 onwards each year down to $5,400 at ages 65 to 69. You can find full details of the default value of 4 units of cover, and how First Super’s insurance cover works in our Insurance Guide.

More details on First Super’s insurance inside super products are available in the Insurance Options section of our website.

How much do I pay for my insurance?

Most members pay $10.76 per week from their superannuation account. This costs less if you have changed to our low-risk or professional insurance rates.

What are the advantages of insurance through super?

  1. You’re protected. Rest easy knowing that you’re protected in case of serious illness, injury or death.
  2. Better cash flow. Insurance paid for through your super account means you don’t feel the hurt of paying for your insurance each month. You’re making contributions as part of your pay, which you’ll barely notice.
  3. It’s cheaper. Our bargaining power enables us to negotiate competitive fees for our members – which means you’re paying less for your level of cover than if you were to buy insurance as an individual outside of super.

Who benefits from insurance through super?

People like you. Over the past 10 years, First Super has paid out more than $149.3 million* in claims to help members and their dependants at their time of need.

Below are anonymised examples from real-life First Super insurance claims cases in recent years.

Mr F was 19 years old, and had been a First Super member for just a few months, when he suffered multiple injuries in a road traffic accident. Mr F received an insurance policy payout of $200,000. Receiving the insurance payment allowed Mr F’s mum to organise home modifications, to get assistance with home care, and to pay for ongoing medical and living expenses as his main carer.
At age 45, Mr C was diagnosed with Motor Neurone Disease and lodged a claim through his insurance with First Super. Mr C received an insurance policy payout of $103,600. This member’s TPD cover gave him and his partner money when they needed it to meet his general outgoings as well as unforeseen medical/home care expenses.
Mr A had received automatic Death and TPD cover when he joined First Super aged 20. Tragically, aged 25, he passed away suddenly leaving a de facto spouse and two pre-school age children. Mr A’s family received an insurance policy payout of $200,000. Having Mr A’s insurance in super meant that his family would have the financial resources to continue living the life he would have wanted for them after his death.

*Figures provided by SBA / MetLife for the period 1 January 2009 to 31 March 2019.

Decision time: considering your next steps

Based on queries from other members, there are some things to think about to help you decide whether or not keeping your First Super insurance cover is right for you.

How can you check your First Super insurance cover?

You can find information about your level of Death and Total Permanent Disablement cover, and how much you pay for it, in your Annual Member Statement. Otherwise, you can contact our Member Services Team for your details.

What would you do if something unexpected happened?

How would you pay bills, loans and living expenses if you were no longer here to provide for your family, or suffered an injury that meant you couldn’t work anymore?

Stop and think about it for a second. Would you have enough savings or other income for the long term? In the unfortunate event of your death, how would your dependants be financially affected?

Your First Super insurance cover would provide a lump sum payment in the event that you died, or if you were unable to work due to total and permanent disability. This money could be used for unexpected expenses, as well as paying for general living costs and bills.

Do you have multiple insurance policies through super?

If you have more than one super account, you may be paying for several insurance policies. So it may be in your best interests to keep just one insurance in super policy, depending on how much cover you want/need.

On the other hand, one super fund’s policy may offer more valuable benefits than another.

What’s more, there can be advantages to having several super accounts with insurance cover attached. The more super accounts you have, the more insurance benefits – such as TPD – you may have available to claim on.  This means boosting your potential benefits without having had to go through underwriting, as is generally the case for policies outside of super.

We recommend checking the level of cover you have from all sources – including any policies outside of super – and seeking financial advice if you need help to work out the best level of protection for your circumstances.

Our Financial Advice Team can review your current cover and advise you on the level of insurance cover you should have based on your personal and financial circumstances. Book a call here.

If your insurance is cancelled, then you decide at a later date that you want it again, how would you get it back?

Unfortunately, it is not as easy as just switching your insurance back on again. You will need to meet some conditions, such as being in active employment on the last day of the 24-month period after reinstatement. If not, then limited cover continues until you return to active employment for 30 consecutive days.

IT’S YOUR CALL – WILL YOU DECIDE TO STAY PROTECTED?

I want to keep my insurance in super
Still uncertain? We’re here to help. Get in touch with our Member Services Team on 1300 360 988 or mail@firstsuper.com.au

FAQs

What does premium mean?

Your premium is the amount you pay for your insurance each month.

What is death cover (life insurance)?

Life insurance’ or ‘death cover’ pays a set amount of money when you die, or are diagnosed with a terminal illness. The money will go to the people you nominate as beneficiaries on your policy.

What is TPD cover?

Total and Permanent Disablement (TPD) cover pays a lump sum to help with rehabilitation and living costs if you are totally and permanently disabled. TPD is often included or bundled with life cover.

Do I need to be working to qualify for these covers?

Not at all. As long as you have insurance, you’re entitled to claim benefits should something happen to you.

How do I make a claim?

In order to make a claim, simply give us a call. We can arrange to have the claim forms sent out to you and connect you with a claims specialist who will support you through the claims process.

Can I cancel my insurance at any time?

You can cancel the insurance you hold through your First Super account at any time. But if you wish to get it back at a later date, unfortunately, it is not as easy as just switching your insurance back on again.
You will need to meet some conditions, such as being in active employment on the last day of the 24-month period after reinstatement. If not, then limited cover continues until you return to active employment for 30 consecutive days.

If I cancel my insurance or it is cancelled, then I decide at a later date that you want it again, how do I get it back?

Unfortunately, it is not as easy as just switching your insurance back on again. You will need to meet some conditions, such as being in active employment on the last day of the 24-month period after reinstatement. If not, then “Limited Cover” continues until you return to active employment for 30 consecutive days.

“Limited Cover” means the Insured Member only being covered for claims arising from a “New Event”.

A “New Event” means an illness which first becomes apparent or an injury which first occurs on or after the date the cover last commenced, recommenced or was reinstated in respect of the Insured Member.

“Active Employment” means:

  • an Employer-sponsored Member or Eligible Person who is employed  by the employer and who is capable of performing their identifiable duties without restriction through any illness or injury on a full-time basis (whether or not he or she is working those hours);
  • a Personal Member or Eligible Person who in our opinion is capable of performing their identifiable duties without restriction as a result of any illness or injury for at least 35 hours per week (whether or not they are actually working those hours).

How much cover do I need?

This is a personal question and is best answered by an expert financial adviser. Generally speaking, you want enough to pay off any debts, cover ongoing medical costs and living expenses you and your family.

Who profits from this insurance?

First Super does not profit from your insurance cover. Our core aim is to maximise your retirement savings, but naturally we are also concerned about your overall best interests.

Am I paying for multiple insurance policies through super?

If you have more than one super account, you may be paying for several insurance policies. So it may be in your best interests to keep just one insurance in super policy, depending on how much cover you want/need.

On the other hand, one super fund’s policy may offer more valuable benefits than another.

What’s more, there can be advantages to having several super accounts with insurance cover attached. The more super accounts you have, the more insurance benefits – such as TPD – you may have available to claim on. This means boosting your potential benefits without having had to go through underwriting, as is generally the case for policies outside of super.

We recommend checking the level of cover you have from all sources – including any policies outside of super – and seeking financial advice if you need help to work out the best level of protection for your circumstances.

Our Financial Advice Team can review your current cover and advise you on the level of insurance cover you should have based on your personal and financial circumstances.

How does my insurance differ to WorkCover?

WorkCover is automatically provided to all employees in Australia, but there are some clear ways that it falls short of peoples’ needs should something happen:

  • WorkCover does not protect against injuries sustained outside of work – life and TPD insurance cover you for unfortunate circumstances, no matter how or where they occurred
  • The laws that govern worker’s compensation differ from state to state in Australia. So, you may be eligible for medical benefits, disability cover, as well as loss of income in a particular state, but may be able to claim only medical expenses in another – life and TPD insurance have clear definitions that hold up wherever you are

There’s no cover for expenses unrelated to the injury: If you do sustain an injury that is eligible for WorkCover, then you stand to get only those expenses which are related to the injury – with life and TPD insurance, you know the set amount which you’re entitled to claim.