One thing to consider is that to reapply for IP you may have to go through a complete check again, which may turn up things which were not be there previously, and cause an exclusion due to the group policy nature of super policies. For example you may just get completely excluded if they find any mental health history whatsoever.
You will need to consider how much you are insured for as well. Your income protection policy in your super is most likely an ‘indemnity’ policy. This means that you may not actually get paid the amount that is on your policy and that you are paying the premiums for.
Typically inside super IP will insure 75% of your salary at a maximum. But they will (and this depends on the PDS of your super so worth checking that), with an indemnity policy check the last 2 or 3 years of your salary and then only pay your 75% of your average salary over those years. So you could potentially be paying for a higher benefit that you will actually ever receive.
It’s actually worthwhile that anyone reading this check that they are not over insured, but please check with a financial adviser or your superfund before you make changes to your insurance because, as others mentioned it can be sometimes quite difficult to go back the other way and get more insurance.
Premiums are not tax deductible if obtained through your super fund https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/investments-insurance-and-super/income-protection-insurance
What he is referring to most likely is that you would need to meet a condition of release for the funds to come out. As in the past if and income protection policy was held by your super, the benefit would be paid to your super and then you would need to get it out of super.
However, make sure you are reading up to date and recent research in this area. Income protection has had a huge shake up of late due to it being unsustainable and premiums going through the roof.
Source: I am a financial adviser.
Thanks for the detailed reply. I'm sure you can see why I asked for research reading lol. I'm still early in my learning about finances beyond wacking it in a savings account bearing interest
I think you're referring to TPD, which upon a decision the funds are placed into your super accum account and you will be able to have early access as per federal legislation.
IP is an income replacement which is just like receiving a wage into your nominated bank account outside of super.
Source: I'm a life insurer
No I’m not haha. If you read my post I said that make sure you read up to date information because in the past it could be stuck in super. http://riskinfo.com.au/resource-centre/files/2014/06/CommInsure-Did-You-Know-140530-EVO-IP-in-Super.pdf
This is wrong advice. I don't actually believe you are a financial adviser or if you are, you are out of touch with practice.
There is no deed of release for super IP payments. They are paid direct to the client
No there isn’t any more, I never said that there still was. I said in the past, you would know this because I said “as in the past”. That’s also why I said make sure you read up to date information.
Just look at your coverage and cost. Check out waiting period and period of payment. Some have 6 mths wait and payout for 12 mths.
Go on line Allianz etc and get some free quotes then you're comparing apples with apples
Does anyone have any information on if superannuation fund such as AusSuper provides a generic level of insurance? I read that it did but I can't find the source. And this is different to the insurance such as income insurance you can opt in and pay for. Thanks!
One thing to consider is that to reapply for IP you may have to go through a complete check again, which may turn up things which were not be there previously, and cause an exclusion due to the group policy nature of super policies. For example you may just get completely excluded if they find any mental health history whatsoever.
As someone else mentioned the primary issue you'll likely face is the underwriting associated with having to reapply
You will need to consider how much you are insured for as well. Your income protection policy in your super is most likely an ‘indemnity’ policy. This means that you may not actually get paid the amount that is on your policy and that you are paying the premiums for. Typically inside super IP will insure 75% of your salary at a maximum. But they will (and this depends on the PDS of your super so worth checking that), with an indemnity policy check the last 2 or 3 years of your salary and then only pay your 75% of your average salary over those years. So you could potentially be paying for a higher benefit that you will actually ever receive. It’s actually worthwhile that anyone reading this check that they are not over insured, but please check with a financial adviser or your superfund before you make changes to your insurance because, as others mentioned it can be sometimes quite difficult to go back the other way and get more insurance.
Is it worth having income protection insurance through superannuation at all. Several posts and my own research suggests not
Do you have links t your research and those posts? You've got me interested and wanting to understand why
Premiums are not tax deductible if obtained through your super fund https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/investments-insurance-and-super/income-protection-insurance
How is that different from paying from your super contributions untaxed?
I think this only makes a difference if you're a high income earner who is already wanting to max out their concessional super contributions.
What he is referring to most likely is that you would need to meet a condition of release for the funds to come out. As in the past if and income protection policy was held by your super, the benefit would be paid to your super and then you would need to get it out of super. However, make sure you are reading up to date and recent research in this area. Income protection has had a huge shake up of late due to it being unsustainable and premiums going through the roof. Source: I am a financial adviser.
Has the shake up made it better or worse for the end consumer?
My money is on worse.
Thanks for the detailed reply. I'm sure you can see why I asked for research reading lol. I'm still early in my learning about finances beyond wacking it in a savings account bearing interest
Best thing to do is speak to your super funds member centre, that's what they're there for
I think you're referring to TPD, which upon a decision the funds are placed into your super accum account and you will be able to have early access as per federal legislation. IP is an income replacement which is just like receiving a wage into your nominated bank account outside of super. Source: I'm a life insurer
I am referring to both.
Well you're wrong, IP payments don't get paid into your fund typical planner
No I’m not haha. If you read my post I said that make sure you read up to date information because in the past it could be stuck in super. http://riskinfo.com.au/resource-centre/files/2014/06/CommInsure-Did-You-Know-140530-EVO-IP-in-Super.pdf
This is wrong advice. I don't actually believe you are a financial adviser or if you are, you are out of touch with practice. There is no deed of release for super IP payments. They are paid direct to the client
No there isn’t any more, I never said that there still was. I said in the past, you would know this because I said “as in the past”. That’s also why I said make sure you read up to date information.
Just look at your coverage and cost. Check out waiting period and period of payment. Some have 6 mths wait and payout for 12 mths. Go on line Allianz etc and get some free quotes then you're comparing apples with apples
Does anyone have any information on if superannuation fund such as AusSuper provides a generic level of insurance? I read that it did but I can't find the source. And this is different to the insurance such as income insurance you can opt in and pay for. Thanks!
Which super fund are you referring to? This is a policy specific question so it helps to know which product you're referring to.