I'm looking to switch super providers and realised many have "death, income protection and total and permanent disablement" insurances they try to get you on.
I know it might silly, but is it worth getting these or a sub-set - if so what is the best combination?
Yes. I like the peace of mind that my family wont be povo if I die. Yes it is expensive, but I choose to spend money on it.
I think it is worthwhile if your sudden departure would leave your dependants struggling. How much? Enough to cover all liabilities and some extra to have a few years of salary up their sleeve till they sort their new circumstances out.
If you have no dependants or just don't like them then probably not worth insuring your life but you may still want permanent disability insurance for yourself.
If you are single, you really don't need death insurance, it also pays out very little. your better off with life insurance.
Income protection is very expensive, and the chances they actually pay out is slim to none if you ever need it.
Total and permanent disability is cheap, and you most likely will never need it, but its good to have for some peace of mind.
If you are single, you really don't need death insurance, it also pays out very little. your better off with life insurance.
The level of death insurance can be chosen so it's not necessarily "very little". Death Insurance is Life Insurance. What's the difference in your mind?
Income protection is very expensive, and the chances they actually pay out is slim to none if you ever need it.
Why do you say that? I see claims approved every day. If you've got a legitimate claim that's within the policy conditions, it's not easy for the insurer to deny.
Total and permanent disability is cheap, and you most likely will never need it, but its good to have for some peace of mind.
If anything, this is probably going to be the least likely to pay out depending on the TDP definition of your policy.
Insurance is useless to everyone, unless one of the trigger events occurs - then you wish you had it.
Some super has TPD & death linked, you can't take TPD only and drop death insurance. Either get both or drop them.
I've only seen one insurance policy in my life that allowed TPD without the Death Cover. Checked with the insurer and they confirmed that it's correct!
If you have liabilities or dependents, then yes it's important to have it. If you're currently in an employer fund then you likely already have a basic level of cover unless you opted otherwise when you joined.
If you do end up applying for cover in your new fund, you may need to be underwritten by the funds insurer. Most funds have an automatic acceptance limit where they will just give you the cover up to a certain threshold. If you apply for cover above that threshold you'll need to provide medical information to be assessed.
I have income protection as part of my employment.
I was diagnosed with cancer 3 years ago and had nearly a year off work, and still received 85% of my average wage.
Really takes the stress away knowing you can still pay bills and provide for yourself and partner.
Check the premium rates in your super policy. In most cases, it'll be slightly cheaper than getting an external one because the policy is purchased as a "group policy" with the rest of your colleagues. Most plans will allow you to increase your Death/TPD Cover (but will need health evidence) while keeping the same premium if you're healthy. Any increase will be on top of the arranged "default cover" in your fund. The default amount could be an amount based on age, a set multiple of your salary or a percentage of your average salary multiplied by the time between now and retirement age.
The SCI cover premiums are tax deductible - the deductibility will be taken care of in your Super if you have that cover or if you take out that cover externally, you can claim the premiums as a tax deduction in your Tax Return.
Keep in mind that if you do go external, multi Death/TPD policies are payable when those events happen, but for SCI, only one policy is payable at a time. That is, you will not get 75/85% x 2 of your income if you have two policies and become temporarily disabled. Pick the best one and keep that one only. Take into consideration the length of the policy - most will be up to two years, but some will pay up to age 65.
The downside of the Super insurance is it has to be approved by both the Insurer and Trustee (although the Trustee usually approves once the insurer does) so it might take a slightly longer than having an external policy for approval. But the plus side of all the cover in Super is the premiums get deducted out of your Super balance and there's no immediate hit to the hip pocket.
I'm with Australian Super with all kinds of insurance that come by default. I was out of work for 5 months and I got paid 85% for 3 months salary as per the conditions. Claim had a lot of paperwork involved but it was easy.
Mind to disclose the reason being out of work ?
Fracture close to the knee when I was playing indoor soccer.
Wasn't this cover by workcover??
I am with Australian Super as well but heard from my colleague that claiming income protection is very hard if you are out of work like company retrenching staffs, etc. Do you know what are the conditions to qualify for income protection for Australia Super?
The "income protection" that OP is referring to relates to the serious illness and disablement rather than retrenchment.
Retrenchment cover doesn't exist in Australia. Sometimes you can get some cover related to specific loans where your repayments are covered for a certain period, but that's different to "income protection".
I've heard Ozb centrelink payments enough to save up for a house deposit of current market.
So that should be plenty enough to cover as free income protection.
TIL: people actually buy, with thier own money, life insurance…