Most Australians wouldn’t dream of driving around in a car that’s not insured. Nor live in a house without insuring the building and contents to protect against damage or theft. And yet, if you’re one of the Australians who has insurance in place that protects against an accident or illness that affects your ability to earn income, you are in the minority.
Experts estimate only a third of the working population have income protection insurance. And, there’s a $1.8 trillion gap between current levels of insurance and the cover Australian families would need to maintain their quality of life until retirement if affected by death or disability. Even for those who have life cover, the level of cover taken is rarely enough.*
Some people may not realise that the following insurances are provided through their super fund:
- Life insurance – pays a lump-sum benefit to dependents when the insured person dies. It aims to pay outstanding debts and cover ongoing living costs of dependents.
- Total and Permanent Disability (TPD) insurance – provides a lump-sum payment if the insured is totally and permanently disabled.
- Income protection – provides insurance against loss of income when a person is unable to work and earn income for a period of time due to illness or injury. This is thought by many people to be more important than life cover as people are more likely to have a substantial period off work than to die before retirement age.
However, it’s important also to realise that the default level of cover provided may not be specific to your needs and circumstances. Here at IFS, we urge all members to review the level of cover provided through their super and adjust it, if necessary, to ensure the right level of cover is in place.
Taking insurance inside or outside of your super is an individual choice and will come down to your individual needs and priorities.
We recommend that you consult your super fund, refer to the relevant product disclosure documents or speak with a financial adviser who would take into account your personal circumstances and advise you accordingly.
This article is issued by Industry Fund Services ABN 54 007 016 095, AFSL 232514. It contains general information only and has been prepared without taking into account your objectives, financial situations or needs.
* Rice Warner, Underinsurance in Australia 2017.