Unable to work? You might be able to claim on your super insurance
Many people who are suffering hardship are unaware they could get financial assistance through their super insurance. Often hidden in the fine print on your superannuation statement, it’s easy to miss, especially as you don’t arrange the insurance. Instead, the premium is automatically deducted from your super account.
What does super insurance cover?
Your super insurance will include death cover, total and permanent disability cover (TPD) and income protection. (See the government’s Moneysmart website, Insurance Through Super.)
Death cover pays a lump sum or income stream to your beneficiaries when you die, or if you are diagnosed with a terminal illness.
TPD cover pays a benefit if you become seriously disabled and are unlikely to work again.
Income protection pays a regular income for a specified period if you are unable to work due to a temporary disability or illness.
Importance of seeking professional help with your claim
Insurers and the government are making it increasingly difficult for people to claim their own TPD and income protection. This is why it’s wise to seek professional advice and assistance.
Before working with Stacks Law Firm, I was a financial adviser with the Salvation Army for many years. During my career I have helped 78 clients, who had fallen on hard times, to claim over $7 million in super insurance.
None of these people had any idea they had this insurance until we examined the fine print for them.
TPD payout enables cancer survivor to keep his house
We recently helped a man who had developed cancer in his arm to make a claim with his super fund. The cancer was cured, but the treatment left his arm swollen and painful and he could no longer work.
With three student children to support and a mortgage to pay, the man was finding it impossible to manage on a disability pension.
The man wanted some of his super released to help save his house and help his children complete their education. We were able to get a portion of his super released and were also able to claim the TPD insurance attached to the man’s super – which he had not known about.
We then found another “lost” super fund of his, which also included TPD insurance. Eventually, both TPD claims were paid, resulting in over $200,000 being paid to our client (on top of his super balance).
Woman receives income protection payout despite closing her super fund
In another case, a divorced woman had been supporting herself and her children, working as a nursing assistant. After the children grew up and left home, her health steadily declined until she was no longer able to work. She went onto a disability pension, and when she turned 55 she withdrew her super and closed the account.
Once the woman’s super funds were used, times got tough for her on the pension. When she sought our advice, we found that before she left work she had income protection insurance attached to her super.
While in most cases the cover only pays for up to two years, in this woman’s case it continued until she turned 60. Although her cover was small, it had been seven years since she had left work and so her income protection payout included backpay of over $70,000.
Super insurance may be valid if held when you last worked
One case involved a 48-year-old indigenous man, who had been badly burnt and injured and had undergone numerous surgeries and procedures over a six year period. He was unable to work and as a result, he was living on Newstart and struggling to make ends meet.
The man had not accumulated any assets during his life and found there were too many barriers to applying for a disability pension.
The man was referred to our team and we soon discovered that he had several superannuation accounts. At least two of these had TPD insurance at the time he last worked. We proceeded with the first claim for $155,000. It was eventually approved and we have now started on his second claim for $99,000.
If this is approved, the man intends to buy himself a small flat. It truly can be life-changing.
$104,000 super insurance payout saves man on brink of despair
Homeless for most of his life and experiencing severe financial difficulties, a 50-year-old man was referred to ou team.
He had no education and found it difficult to speak, read or write. He was undernourished, suffering from Hepatitis C and needed a knee replacement. Profoundly deaf, the man was extremely distressed and had attempted suicide on several occasions.
As he was no longer able to work, our team looked into the possibility of him claiming his super insurance. We found $104,000 in a fund, which was eventually approved, giving the man a chance at a better life.
Small inactive super accounts lose their insurance
Terminally ill with breast cancer, a woman recently met with me to review her two superannuation accounts and check what she could claim. Aware that she should be entitled to super insurance, the woman had kept both funds open – one was quite large, the other relatively small.
In 2019, new legislation on super insurance meant that members who had small inactive accounts would lose their insurance unless they notified the superannuation company of their wish to retain it.
While the woman believed she had notified the smaller fund that she wanted it to remain active, unfortunately there was no evidence of this. Therefore the insurance premiums had not been deducted from her account and we were unable to mount a challenge.
However, because the woman stopped work prior to her insurance being cancelled, she may still be able to claim her TPD cover, alongside the super balance that has already been paid out to her.
Additionally, the woman’s larger fund has released her super balance, as well as paying out her TPD insurance.
Have you checked your super insurance?
These cases illustrate the huge (and widely unknown) benefits of having super insurance. It’s affordable because the premiums don’t come out of your pay packet, but are instead deducted from your super balance. It’s also generally much cheaper, with fewer strings attached.
These matters also demonstrate that if you are no longer able to work or are terminally ill, it’s possible you could claim a lump sum through your super insurance, even if you’ve closed your super account. This could completely turn around your quality of life.
Finally, before making a claim, it’s important to obtain legal advice. In my experience, your claim is far more likely to be approved when lodged by your lawyer.
They can ensure that the form is completed correctly and minimise the risk of your super fund rejecting your claim.