If you are unable to work due to injury or illness and have been off work for 3 to 6 months (depending on your policy) you may be eligible to claim for total and permanent disability (TPD) insurance, which is often a ‘default’ insurance that is designed to assist you financially should the unthinkable happen.
However, the Federal Government have recently rolled out new reforms in respect of this insurance which will come into effect 1 July, 2019. These new laws are intended to protect members from unknowingly paying hidden fees and insurance premiums, eating away at retirement savings.
On 1 July 2019 these insurance benefits will be cancelled on all inactive accounts (where no contributions have been received for 16 months) regardless of the balance.
Whilst in some instances this could be saving members from unknowingly paying insurance premiums, this could also affect people who have simply stopped work temporarily, taken maternity leave or started their own business; leaving them unknowingly without this cover.
To ensure that you do not lose your cover and TPD benefits you need to advise your superfund and ‘opt-in’ two weeks prior to 1 July 2019.
We commonly find people who come to us are active members of more than one fund and therefore have multiple sums of money owing to them. The new laws may reduce your superannuation fund benefits, if, for instance, you are unable to work for a period of time, are receiving workers’ compensation benefits where no monies are deposited into your superfund, or where you have not made contributions to a certain fund for 16 months.
Many hard working people have lost track of every superfund they’ve ever been a member of. We can uncover all the funds you’ve ever joined and find out if they owe you money in the form of insurance covering members who are unable to work. In some instances, we’ve traced funds back 10 years and forced superfunds to pay members money owed to them. In most circumstances our clients were unaware they had any right to claim, even though the fund had been holding their money for years.
If you are unsure whether these changes may affect you, we urge you to seek advice from a financial adviser as a matter of urgency.