Insurance is an important part of Australia’s superannuation system. Despite this, there are still many people who do not know they have insurance within super and are unaware if the insurance they hold is adequate for their needs.
Furthermore, of those who do have insurance inside super, five in ten are unaware that they have an option to increase their level of cover, leaving them with just the default level nominated by their super fund1. Many are also unaware they can decrease or cancel their cover at any time.
Here are some simple tips to help you find out how much insurance cover you have in your super and how to determine if your cover is adequate to suit your needs.
Insurance in super: the numbers
66% of Australian workers do not know how much insurance they need
69% have never changed their default cover
22% say they will probably never review their default cover
53% of those who have never changed their cover aren’t aware they can
1. Check your cover regularly and vary if needed
Most super funds offer default life insurance automatically when you join.
New MTAA Super members are automatically provided with default Death and Total and Permanent Disablement (TPD) cover (provided they are eligible).
While default cover is a good start, it might not be right for you. A person with a mortgage and a young family will probably need more cover than a single person with no financial dependants.
Therefore, you need to review your cover as your lifestyle and financial circumstances change. This includes when you get married, change jobs, have a child, buy a house, get divorced, and retire.
As a rough guide, the amount of cover you may need is the difference between how much cash your family would have right now if you were to die or become disabled and how much cash your family may need in the future2.
When determining how much cash they would have now, include money you have in super, shares, savings, and existing insurance policies. It’s also a good idea to know how much paid leave you have and if you’re entitled to any government benefits or workers compensation if you get injured.
When determining how much your family may need in the future, consider the size of your mortgage and any other debts, as well as childcare, education, and other future costs.
The simplest way to calculate your cover needs is to use MetLife’s online insurance calculator available at mtaasuper.com.au/insurance. If you’re still not sure, you can always get some advice.
It’s important to remember that insurance within super is optional. This includes default insurance. If you feel you do not need the cover offered through your super, you can cancel it at any time.
3. Get some advice
Insurance is an important part of your financial security. That’s why we have Superannuation Advisers throughout Australia dedicated to helping you understand your insurance options and to make sure you have an appropriate level of cover to suit your lifestyle.
If you need help calculating your cover needs or want to know what type of cover is appropriate for your situation, we can help.
To talk to an adviser, call us on 1300 362 415.
Sources: 1 Insurance Inside Super Report 2018, MetLife Australia 2 moneysmart.gov.au/insurance/life-insurance, ASIC’s MoneySmart (accessed 2 July 2018)
Support when you need it most
When Jake Tasker became a member of MTAA Super 15 years ago, he had no idea how important his insurance within super would become…
On Valentine's Day 2017, 29-year-old Jake Tasker and some friends, including his new girlfriend, took a houseboat cruise up the Nambucca River. A few hours into the retreat, he heard screams and went to investigate. That’s when he spotted his friend’s partner floating unconscious in the water.
Without hesitation, Jake dove head first into the river to save the man — a selfless act that would change his life forever. Jake hit a sandbank below the water. The impact shattered his chest and neck. He was left drifting on his back, keeping himself afloat with the little movement that remained in his hands.
After reaching shallow water, Jake’s girlfriend was able to get to him. She held his neck straight to avoid further damage. A friend dialled Triple Zero from the boat.
Unable to get Jake out of the water, his girlfriend and friends stayed with him and kept him afloat for the five and a half hours it took emergency
services to locate them.
Jake was flown by helicopter to Princess Alexandra Hospital in Brisbane. There he underwent emergency treatment for spinal injuries and hypothermia. Doctors operated on him for over ten hours before placing him into an induced coma.
The following day, they told Jake’s family that Jake had broken his neck in two places and was lucky to be alive.
Jake was diagnosed with quadriplegia and was unlikely to ever walk again.
Jake was transferred to Royal North Shore Hospital in Sydney. There he spent over three months recuperating in a hospital bed. This was followed by two months of rehab at the Royal Rehabilitation Centre.
Although Jake’s heroic actions resulted in his friend’s partner being found and rescued from the water, his world had changed.
A motor mechanic by trade, Jake’s job needed him to stand, bend, kneel and lift heavy items. Wheelchair-bound, and no longer able to perform these duties, Jake found himself unable to earn an income.
Luckily, Jake had Total Permanent Disability cover through his super — not that he was aware of it.
"I didn’t think that I had any insurance whatsoever."
Jake told his claims assessor, “I thought that if it happened at work I was insured. I didn’t think it covered me in the middle of a river when I jumped in. I probably wouldn’t have even looked at it if my mum didn’t raise it.”
Because he was unlikely to ever return to work within his education, training, and experience, Jake’s claim for a Total Permanent Disability benefit was accepted by the insurer MetLife and the MTAA Super trustee.
With the insurance payment, Jake can now afford the equipment and rehabilitation he needs for his injuries.
Friends and work colleagues have also banded together to support the Tasker family. They have set up a fundraising website to help Jake on the road to recovery. Jake is determined to prove his doctors wrong and walk again.