Insurance through super is a true member benefit and due to the purchasing power of 100,000+ members, NGS Super can provide it to members at a wholesale rate. The automatic provision of default cover through industry superannuation funds has gone a long way to remedy the chronic problem of underinsurance in Australia.
In the early days of compulsory super (1988 for NGS Super) insurance, like investment, was a simple matter. The fund provided Death and Total and Permanent Disability insurance only for a premium of $1 per week. And as with investments, the range of choices was limited.
Default cover was provided for eligible members and thousands of families received the benefit of payouts in the case of a death in the family or a total and permanent disability. In some cases, the affected families did not even know that insurance was attached to the account until they were advised by a lawyer, a family member or the Fund.
As the membership grew and funds under management continued to build, the Trustee sought to improve the insurance offering so that members could customise their insurance to suit their individual needs. In 2001, Income Protection insurance was introduced to enable teachers and support staff at that time to have 75 percent of their salaries protected for a period of two years.
With the passage of time, the Trustee was able to add features to assist members customise their insurance further. In 2007 fixed cover was introduced. This allowed members to fix death cover at the current level for the rest of their working lives. So rather than facing the declining age-based benefit payments, a 40-year-old could fix their cover until age 65 with the premium increasing with age every year.
Members were also able to obtain higher levels of insurance without underwriting in the case of certain life events such as marriage or the birth of a child.
As the pool of savings and the membership grew, the NGS Super Trustee was able to improve the quantum of payments for Death cover and Total and Permanent Disability insurance and significantly, Income Protection insurance increased to a five-year payment period after a three-month waiting period. These enhancements provided members with greater peace of mind knowing that bills would continue to be paid for up to five years in the case of illness or accident.
In terms of the quantum increases in Life cover, a 40-year-old’s benefit (NGS Plus) is $550,000 for a premium of $5.97 per week; a 50-year-old’s benefit is $390,000 for a weekly premium of $8.26 per week. It is prudent to consider the level of cover you need as it is possible to dial-up or to dial-down subject to underwriting.
So now the palette of insurance options is wide, and it is up to members to customise it to suit individual needs. Large mortgage? Large family? No family? Grown up children? Is the default cover best for me?
And another important fact to consider – Death and TPD payments can be paid from multiple funds, but Income Protection (IP) payments will usually be paid from only one fund. Let’s say you have $4000 per month cover with Fund A and $2000 per month cover with Fund B. If you have a valid IP claim, Fund A will usually offset (deduct) the payment you’re entitled to from Fund B, so your maximum benefit would be $4000 per month (not $6000 per month) from both funds.
So if you’re in more than one fund and paying income protection premiums in both it’s worth checking with both funds – you may be wasting your money paying for the lower amount of IP cover.
It’s worth reviewing your insurance to know what you are covered for and what you are paying. You can download the ‘Insurance Guide’ from the NGS Super website or phone 1300 133 177 for any queries you may have. As a Fund with members as a core value, we will be able to assist you with any questions you may have and any adjustments you may want to make.
Bernard O’Connor NGS Super