Maurice Blackburn

The hidden risks of rolling over your super funds

Australians could be at risk of losing valuable insurance policies to protect them if they become chronically ill or disabled because of pressure to consolidate their superannuation funds, Maurice Blackburn Associate Andrew Weinmann said today.

Mr Weinmann said many Australians were bombarded by advertising from financial services companies who urge them to roll their super into one account.

"It is estimated that more than one third of Australians have more than one superannuation account and many three or more," Mr Weinmann said.

"Financial services companies and super funds themselves spend millions of dollars urging Australians to roll over their accounts into one fund.

"While this may be the best way to manage fees across several super accounts I would seriously caution consumers against dropping their insurance cover or consolidating all their super funds without first thinking very carefully about their individual and family needs.

"Many super funds contain insurance cover that is cheaper than personal insurance".

"The cover can be lump sums, for death or total and permanent disability (TPD) or monthly payments for temporary disability."

Mr Weinmann said many group superannuation funds, such as industry funds, provide automatic disability insurance cover (up to a certain limit) without the need for a health questionnaire.

"This means that even if you have a pre-existing injury or sickness you can usually get insurance cover and it won't exclude cover for the pre-existing disability," he said.

"Every day Maurice Blackburn hears from people who have relied on the insurance cover within their superannuation policy if they became chronically ill or disabled.

"Always check the insurance within your super fund before any plans to consolidate as it could make a huge difference financially and emotionally."

Maurice Blackburn has launched a new website and a national advertising campaign which explains superannuation and insurance rights, how the benefits work and how people can claim them at www.superclaims.com.au

The facts about superannuation and insurance

Automatic Cover

The cover can be lump sums, for death or total and permanent disability (TPD) or monthly payments for temporary disability.

Many group superannuation funds, such as industry funds, provide automatic disability insurance cover (up to a certain limit) without the need for a health questionnaire.

This means that even if you have a pre-existing injury or sickness you can usually get insurance cover and it won't exclude cover for the pre-existing disability.

Contribution Based Cover

Contributions based insurance cover is offered by some super funds. 

This type of insurance cover will only remain active for a short period of time after your last employer contributed to the fund. 

The period of cover after the last contribution will vary from fund-to-fund but it usually by 30 or 60 days.

Account Based Cover

More and more super funds are now offering account based insurance cover.

This means that the insurance will continue after you leave work with that employer so long as there is enough money in the fund to pay the insurance premiums.

Under some funds you must have at least $1,000 to keep the insurance cover going.