Many, if not most, people hold life insurance, or total and permanent disability insurance, through a superannuation fund, and don’t know it – until becoming unable to work due to injury or illness.
On 1 July 2019, major changes will be made to superannuation which could have a serious impact on you, or your family. These changes are being made under the Federal Government’s “Protecting Your Super” package.
While some of the changes are positive, some have the consequence of people whose account has been “inactive” for more than 16 months, and the account has a balance below $6,000 having their superannuation balance consolidated – that is, having the balance transferred to the Australian Taxation Office (ATO), and the account closed.
How a person may find themselves in this position is more common than you might think.
At Bourke Love Lawyers, we often represent people who have found themselves unable to work (for Total and Permanent Disability Claims, find out more here), and therefore contribute to their superannuation funds, for lengthy periods of time due to illness or injury.
For example, a person who is receiving workers compensation payments, will generally not be entitled to have superannuation paid on those payments, because the ATO superannuation guarantee ruling states that payments of workers compensation where no work is being performed by an employee are not included in the employee’s ordinary time earnings when calculating superannuation payable.
A person with an injury or illness which takes a long time to heal and rehabilitate can easily find themselves in a situation, through no fault of their own, where their superannuation account has not received a contribution for over a year, but payment of fees and insurance premiums has eroded the account to below $6,000.
This situation is even more likely to happen to a person with a short working history prior to suffering an injury or illness – for example, a young worker at the start of his or her career.
The intention behind the changes is to stop people’s superannuation balances being eroded by paying unnecessary fees, including fees for insurance within your superannuation.
In effect however, people who have paid for insurance policies out of their superannuation for many years, could have those policies expire. Years of policy payments could go “down the drain” because the person isn’t aware of the changes being made starting on 1 July 2019. What’s worse is there will be people out there who aren’t even aware their policies have expired due to the impending changes, and will not realise this until their claim is rejected – because the policy has lapsed.
What can you do?
Check your mygov account, which you can link to the ATO, for details of every superannuation fund you have, and make contact with each and every one before 1 July, to make an informed and deliberate choice about your superannuation.
If you’ve been contacted by your superannuation fund in any way, please take heed of the communication and get back to them as soon as possible.
Don’t leave it too late.
If you are looking for assistance, support and advice regarding your entitlement to claim on a life insurance policy, Bourke Love Lawyers can assist. We charge for the work that we do, not a flat percentage of your benefit, and all initial consults with our firm are free of charge.
The information in this blog is not intended to be legal advice, and should not be taken as such. If you have any queries, contact us now on 1300 15 15 45 to discuss your specific circumstances.
All of our services are No Win, No Pay, with the exception of NSW workers compensation claims, which are funded by WIRO and therefore free to all non-exempt workers covered by the NSW workers compensation scheme.
Find out more information here.