Wealth Protection: MySuper

Wednesday, 3rd Oct 2012
Categories: Insurance, Newsletter

older investors

What is MySuper?

MySuper is a new low cost and simple superannuation product that will potentially replace many existing default fundswhich has been developed as part of the Super Reforms. MySuper is not a new or separate superannuation fund in and of itself – instead it is a framework and a set of requirements for low-fee, low-frills superannuation products. Retail and Corporate superannuation funds can develop a superannuation “product” to meet the MySuper requirements.

How will it affect me?

If you are going to be moving your existing superannuation fund/s over to a MySuper qualified product you need to be aware of a few important issues such as:

MySuper is an Opt-Out system. This means that your superannuation, and the insurance it contains, will change across to a MySuper account unless you actively choose otherwise.

What does it have to do with my Wealth Protection insurance?

Many Australians have some insurance and don’t even know it – it’s held “out of sight” in their superannuation fund. If your funds in superannuation are moved to a My Super account, the insurance, however, will not be moved automatically– instead, the policy will be closed and a new policy will be started in the MySuper account.

You might be thinking, “Can’t I just reapply for the insurance if I want it?” Risk insurance is very different to insuring your house or your car – simply because your personal circumstances and your health change so much over time. If you lose insurance you took out at 25, and reapply now that you’re over 40, you’re likely to face more obstacles and costs to getting insurance this time around. Health conditions like diabetes, high cholesterol, high blood pressure or even being overweight can either disqualify you from obtaining insurance or can drastically increase your premiums. Once an insurance company has issued insurance they can’t cancel it while you (or your super fund) continue to pay the premium (only you, the customer can, however, Life companies can cancel your cover only once the term has expired).So, if you have develop a health condition that an insurer typically won’t cover, exclude certain events or charge you more to cover you may be better off maintaining any existing cover you may already hold via your current Super.

So, what do I do?

A review of your current insurances (inside and outside of superannuation) will help you assess which policies you’d like to keep in place, and which you’d like to change. For those policies held in an old superannuation fund, you can in some cases move them to your chosen superannuation fund – so that you don’t lose the benefits when you consolidate your funds and close down the redundant superannuation accounts.

If you do nothing, you could be losing benefits you didn’t even know you had! So it’s important to take an active role in protecting your assets for yourself and for your family.

Wealth Protection is a complex area, with detailed policies and loopholes which can trip you up if you’re not careful. It’s best to seek the advice of an insurance specialist to make sure that the cover you receive is what you intended and expected. After all, if you are in the unfortunate position of making a claim in the future, you don’t want to add to an already stressful situation by finding out that your insurance doesn’t pay out like you thought it would.

Justin McManus is a Corporate Authorised Representative of Marsh Pty Ltd Australian Financial Services Licensee No. 238983. This information has been prepared without taking account of your objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your objectives, financial situation and needs