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Are You About to Lose your Insurance?





In the 2018/2019 budget (released in May this year) the government talks about tailoring insurance arrangements. 
Basically, every time a person starts a job and opts to use the default, associated industry superannuation fund, they will likely have a group insurance policy (life insurance and/or tpd and/or income protection) automatically opened. 
What this means is that for someone that has multiple jobs over their career they can end up with multiple insurance policies and paying multiple premiums from their super funds. So, the governments idea to hold fewer automatic insurance policies, will allow Australians to grow their balances faster and protect low balances from being eroded entirely.
Make sense? For the most part it seems like a good idea. A 20 something single worker with no debt and no family may not need $500,000 in default life insurance cover. It is an unnecessary cost to their superannuation fund.
Some super funds have started to pre-empt the government’s announcement and are raising the minimum balance required in each fund to keep the automatic insurance in place. So effectively, once a fund slips below a certain amount, the insurance is cancelled. Again, this may make sense for some people but here’s the issue.
If you let these polices be cancelled, and in some cases, members aren’t being notified, you need to understand that you may not be able to obtain insurance elsewhere. 
Don’t assume that you’ll be able to get a new insurance policy down the track. If you’ve had a medical issue or injury an insurance company may apply a loading (increase the premium) or an exclusion (not cover you for certain conditions) if you decide to take out a new policy. 
In fact, you may not be insurable at all. Some occupations are viewed as uninsurable by insurance companies and even family medical history can cause an insurance company to refuse cover.
So be aware that whilst the government’s plan might have good intentions, it may not be wise to let your automatic policies run out without doing a bit of homework first. 
The automatic group policies set up by default within your super certainly aren’t the greatest product on the market. Infact they have many short comings. However they are better than nothing.
Some super funds are raising minimum required account balances as of July 1st 2018 which doesn’t leave much time to think about your needs. 
If you think you may have multiple funds, it may be in your interests to track them down, see what insurance cover you have and then talk to an Adviser like myself about planning the best way forward. Better still, let us do the heavy lifting for you and review each of your funds as part of our fact finding process.
Andrew O’Brien and Hindsight Group Pty Ltd t/as Hindsight Wealth Pty Ltd (ABN 88 168 442 528) are Authorised Representatives of Affinia Financial Advisers Limited ABN 13085335397 & AFS Licence No 237857.  The material contains general advice only and the consumer should consider the PDS and whether the product is appropriate prior to deciding to buy. 

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