3 essential things you can do to safeguard your family’s future19 July 2022
When did you last ask yourself: ‘Would my family manage financially if I became ill or badly injured?’
It’s a scary thought and one that most of us would rather avoid. But the fact that you’re reading this suggests that it’s a question you’re ready to consider, or even re-consider. So, if you answered ‘no’ or ‘I’m not sure’, now may be the right time to think about your finances and check your insurance policies. Here are our tips on what you need to consider.
Already have insurance with Super SA?
Learn more about your cover with our product fact sheets (select the relevant fact sheet for your super scheme).
To see how much cover you have, simply log in to the Member Portal.
1. Check your level of income protection insurance
Income protection can provide you with financial support if you become ill or injured. Think of it as short-term income replacement to help with your usual expenses while you focus on your recovery.
When it comes to understanding the benefits of income protection insurance, there are 3 key questions you should be asking.
When am I eligible to make a claim?
Generally, income protection insurance provides regular income if you’re unable to work either temporarily or permanently, because of an illness or injury, provided you meet the conditions of your cover.
Age is one factor that may affect your eligibility. Most income protection policies cease when you reach age 65 – even if you are still working.
Income protection benefits might also reduce if you receive other forms of income while incapacitated. For example, with Super SA you wouldn’t be eligible to make an income protection claim while you’re receiving workers’ compensation benefits or paid leave entitlements.
It’s worthy to note that you won’t be able to claim if you’re ill or injured and still capable of doing your job. Same goes if you are fired or chose to leave your job.
To understand the ins and outs of income protection eligibility, it’s best to check the details of your cover.
How much will I get if I make a claim?
Income protection will usually cover up to 75% of your lost income while you’re unable to work. Other insurers may cover a little less or a little more, so it pays to check with your insurer.
Your cover may also have other conditions which will impact on your payments. For example, if your cover has a salary cap which is lower than your actual salary, you may receive less than you’re expecting.
It’s also important to be aware of the maximum benefit period. This is how long the payments may last if you remain unable to work due to your illness or injury (you should expect payments to stop if you recover and can return to work).
Income protection within superannuation funds are generally limited to a maximum benefit period of 2 years, but income protection held outside super could be longer. Also keep in mind that payments may stop early if your employment terminates, you reach the maximum eligibility age, cancel your insurance, or die.
Your income protection may also include the payment of super contributions (at Super SA we call this Contribution Replacement Benefit). Most people may not consider this but if you’re not working, your employer is not contributing to your super which can impact your super balance later on.
Knowing how much you’re eligible to receive will help you work out if it will be enough.
How long do I need to wait before I receive my benefits?
This depends on the waiting period. Most income protection insurance has a 30, 60 or 90 day waiting period before paying any income protection benefits. The default waiting period for Super SA’s Triple S Income Protection Insurance is just 30 days, with the option to increase this to 90 days. Generally, the longer the waiting period, the less you pay for your cover.
When deciding on the waiting period, it pays to think about how much you have in leave entitlements and savings.
Before making any decisions you should get in touch with your super fund or insurer to confirm your waiting period. If your income protection insurance is with Triple S, log in to the member portal to view the details of your policy.
See how income protection worked for Adam:
Adam, a Triple S member, sustained a number of injuries when a driver crashed into him and knocked him from his bicycle.
He was in recovery for six months. He used all of his sick leave and then his income stopped.
Adam is employed full time and his salary is $80,000 per year. After serving his 30 day waiting period, his income protection paid a fortnightly benefit of $2,300 (before tax) into his bank account and $218 into his Triple S account.
How we calculated Adam’s income protection benefit:
- 75% of his notional salary (that’s his full time salary of $80,000 x 75% x fortnight period)
- 9.5% contribution replacement benefit payable to Triple S (that’s 9.5% of his gross income protection benefit of $2,300)
2. Check how much you’re covered for death and total & permanent disablement
Although it’s difficult to think about, the reality is that your death or disablement may place a great deal of financial stress on those who depend on you.
Death and Total and Permanent Disablement (TPD) insurance can give you peace of mind knowing that your family can repay debt (including the home loan) and cover living costs if something happens to you.
Some insurers offer death insurance and TPD insurance as individual covers. At Super SA, they are combined into one, meaning you can’t take out one without the other (with the exception of Death Only insurance offered in the Super SA Flexible Rollover Product and to Triple S spouse members).
What is death insurance?
Death insurance pays a lump sum or income stream to the insured person’s elected beneficiaries when they die.In most cases at Super SA, the insured person’s spouse (or putative spouse) will be the beneficiary, unless they nominated a legal personal representative (LPR). When an LPR is nominated, any insurance claims will be paid to the insurer member’s estate and distributed according to their Will.
What is total and permanent disablement (TPD) insurance?
TPD insurance pays a benefit if you become seriously disabled and are unlikely to work again. Or you suffer from a terminal medical condition. Having TPD insurance as well as income protection might provide more coverage to help you and your family when the unexpected happens.
How much cover do I need?
This can be a tricky question for most of us. To get the right level of cover, consider calculating how much money you may need to pay for certain expenses when you die. This could include education fees for your children, the mortgage on the family home, funeral expenses, and paying off loans and other debt.
3. Get financial advice
When it comes to you and your family, you don’t want to leave anything to chance. Speaking to a financial adviser can seem daunting, but getting the right advice can help you plan for the unexpected.
An adviser will look at your financial situation and life stage while taking into account your dreams for the future. This will include your plans for your family if you’re not around.
At Super SA we always recommend you consider seeking advice before you make any financial decisions – including making changes to your insurance.
Want to get started on your way to financial security? Get financial advice today.
 Conditions apply. Refer to relevant Product Disclosure Statement (PDS) and/or Insurance Fact Sheets for more information regarding eligibility for payment of insurance entitlements.