Do you have enough insurance?

Millions of Australians hold insurance through their superannuation – but many of them don’t know what they are covered for, or if that cover is enough or even necessary.

Insurance can be critical when you take on debt or start a family. Here we explain how you can be insured through your super, and what cover will meet your needs.

Covering yourself for possible accidents and illnesses is usually not top of mind, but super can be really useful for this. You can insure for loss of income, total and permanent disability, and death, through your smartMonday superannuation.

Such cover can financially protect you and your loved ones when you no longer can.

“One key advantage in using super is automatic cover. This means if you’re eligible, like most smartMonday members, you don’t have to apply for insurance or provide additional information about your health (which you often do for insurance outside super),” explains smartMonday senior smartCoach Johnny Ng.

Another advantage is that the cost of insurance is paid from your super account, not your personal savings. And that cost is often lower than for similar policies outside super. That’s because smartMonday has arrangements with insurance groups that make it more affordable.

In some cases, employers pay for their employees’ insurance through smartMonday, which means there could be no cost to you. It might be worth checking with your employer if you fall under that arrangement,” adds Ng.

• Log into your smartMonday account online to check if you have cover and how much you have. Your personal homepage will show your insurance details.

Insurance can be critical when you take on debt or start a family.

If you have debt, dependents or are married, then insurance could be critically important for you. The question to ask yourself is how would you or your loved ones manage if you no longer had an income?

Then consider what you want insurance to pay for in the event of your injury, disablement, or death, such as funeral expenses, mortgage, loss of future income, family living costs etc. Try to put a cost to those expenses and then consider what you already have (assets such as superannuation and cash savings). Your insurance can make up the shortfall.

Even thinking through the matters above doesn’t mean it’s easy to decide what you need. To help you, the Moneysmart life insurance calculator takes you through what cover you will need and what insurance could cover if you die. It could be a good place to start.

“Income protection, total and permanent disablement, and death insurances should be reviewed regularly. Your life and circumstances will change, and your insurance should change with it. At certain times you’ll need more cover and other times you will need less,” explains Ng.

“It’s also worth reviewing what you need to do to make an insurance claim. For example, how does your super fund define ‘total and permanent disability’? And what do you need to show to make a claim? Being aware of the conditions to receive a benefit payment can be important if you need to claim.

Lastly, consider the impact of insurance costs on your super balance. While super is an efficient, cost-effective way to have insurance, the fees will lower your balance. Even if that doesn’t seem significant, over time that will add up.