Superannuation changes could leave young Australians with no insurance cover - Polidicks

Superannuation changes could leave young Australians with no ins.. For most young workers, super is a mystery. Happy to land a job, there is often a tendency for new employees to scan the fine print, sign the forms and just get to work. For 23-year-old Erin McIver, super was the last thing on her mind when she started working in retail. "They just gave me a contract, they said this is the super fund that we recommend. So, I was just like, cool, whatever. I don't care," she said. "So [I] just signed whatever they advised and went with that." But every time you switch jobs, you could be leaving behind super — and lots of it. When Erin landed a full-time job in media marketing, she decided to check on her super funds. "I found out they were all over the place, I had three different funds, not much in each of them." She's not alone. The Government estimates there are 9.5 million super accounts with a balance of less than $6,000. And that's a shame, because super funds do better when they are together and the Government now wants to make that happen for you. Because the smaller the fund, the more quickly it gets eaten away by fees and deductions. ... Funds themselves are issuing warnings The Government is determined to put insurance cover under an opt-in arrangement. Insurers and super funds argue removing thousands of members from the risk pool will drive premiums up for those who still have cover. They also say it will be difficult for some members to get "opt-in" coverage due to the high-risk nature of their work, but the government is not convinced. "This is not about stopping insurance, this is about giving people choice," Mr Robert said. "If you wish to have insurance in your super, you can choose to have that." The Government said it was negotiating with crossbench and Labor senators to try to pass the new super bill in November. ... Read the rest of the article at Superannuation changes could leave young Australians with no ins.. tl;dr when Australians sign up for a super account (equivalent of a 401k in US), they are automatically enrolled in life insurance, income insurance and disability insurance. The premiums are taken out of the super account, which ultimately leads to a somewhat lower balance at retirement. The proposal would change the process from opt-out for insurance cover to opt-in, for under 25s. Could raise premiums for everyone else. I’ve kept insurance on my super because you never know when you need it, and it’s only around $2 per week anyways.

I hold the belief that it should be opt-in instead of opt-out. You're investing in super, not paying for insurance. If you want insurance then you can opt-in.

If it’s opt-in, probably a clear majority of people wouldn’t choose it. But there are cases where it pays off, eg a 20 year old bloke in the article who become quadriplegic following a snowboarding accident, who actually got a payout when his mum realised he had total & permanent disablement cover in his super. For only a few $ every week, like seriously I only pay around $2.50 for three insurance policies, why not? Super is a way of safeguarding your future, but it doesn’t necessarily just have to be for retirement savings only.

Obviously having insurance is better than not having insurance, but it's currently set up for super providers to earn a buck off people who don't understand how it works. This is especially bad when people don't realise they have more than one super, and are paying for insurance across multiple funds. That seems to be the bigger problem to be honest, and there needs to be more super education for teenagers entering the workforce to prevent that. Also how are you getting income protection, TPD and life insurance for $2.50 per week? That sounds like what you pay for just income protection alone. Unless your cover is very small?

Pardon me, mine is actually $3.25 per week. I have 95c for death cover at $162,500, 25c for total & permanent disablement cover at $71,500, and $2.05 for income protection at $1,650 per month. The coverage levels are at the default setting. They ought to make insurance coverage a bit more obvious for everyone with super, however then there’s the problem that more knowledge of the insurance coverage will most likely mean more people making claims, and that would likely raise the insurance premiums. But yeah anyways it is really important for people to not have multiple super accounts. The duplicate fees and coverage will just chew away at any savings, so it’s good that the government is at least addressing that part.

alternarively it takes just 10 minutes of your time once you get a job to make sure everything is sorted out or you want to opt out of something.