Insurance explained

In Australia, many families do not have adequate levels of insurance. It’s often overlooked, but life insurance is more important than taking out car or home insurance cover.

Sorting through what you might need with life insurance starts with understanding what it is. So, life insurance includes three different types of cover – there’s death insurance, total and permanent disability cover (often called ‘TPD’) and income protection.

If you’re a member of Australian Ethical Super you probably have death & TPD cover by default (unless you opted out).

One of the major advantages of holding insurance through your super fund is that it can be more cost-effective than paying your insurance premiums outside of super, as super funds have access to group rates. That means super fund providers can group together all the members in their fund and negotiate lower costs with the insurance provider by creating one group policy, which brings down premiums.

Paying for your insurance through your super fund can also be more convenient because your premiums are paid directly from your super account.

Another advantage of insurance through your super fund is that if it’s provided through a group policy, unless you want to make changes, you don’t need to provide extra information, like your previous health details. However, most policies need you to be in full or part time work, or at least be capable of working.

There’s more information about what ‘default cover’ means on page 5, and some useful definitions are set out on page 17 of our Insurance Guide – or you can call us on 1300 134 337.

What is a suitable level of cover?

When you think about how much life insurance cover you should hold, there are a few things to consider, such as your existing debts (like a mortgage) and how much you already have invested in super. So your financial position, your age and occupation are all things to consider when you think about the types of cover that might best suit your situation.

You also need to think about your family’s lifestyle and how much money you or your family might need if you were no longer able to earn an income. This includes things like regular monthly outgoings and other expenses such as medical expenses, holidays or upgrading your car.

Simple tips to help make sure you have the right level of cover:
  1. Find out your current level of cover. For Australian Ethical members this is easy – go online (australianethical.com.au/client-login) or call us on 1300 134 337.
  2. Don’t just settle for default cover – use a calculator like the one at Moneysmart, to help you with those expense details you should factor in. If you want to increase your cover, take a look at our Insurance Guide which explains how to change your level of cover or apply for additional cover.
  3. Let us know about big life changes. If you get married, have children, buy a property or get promoted this may change the level of cover you need. You’ll need to apply within 60 days of the big life change, or within 30 days of your member statement after the event – whichever occurs later).
  4. If you have multiple super accounts, you might want to consolidate your super and insurance with one provider. Just remember that different insurance companies have different rules. So before switching, check that you can transfer to the same level of cover that you’re currently on to make sure you don’t lose insurance cover that you might actually need. Australian Ethical is only a phone call away if you want more information.

Finally, keep in mind that your circumstances are likely to change over the years; you may have more kids, take on a larger mortgage, an investment property or start a new job, with a higher income to protect. It’s worth regularly reviewing your cover and ensuring that if something were to happen to you, your family has enough cover in place so that money is not the most pressing concern. It might even be worth checking in with a financial adviser to make sure you’ve really uncovered everything that you need to look out for.

Don’t forget that as an Australian Ethical member, you can apply to increase, reduce or cancel your cover any time. We’re keen for you to have the right level of insurance to reflect your needs.

How can I change my level of cover with Australian Ethical?

If you want to change your current level of cover, you can:

  • apply online in the ‘Manage my insurance’ section of your online account
  • complete the Insurance Variation Form or
  • call us on 1300 134 337.

Insurance equals peace of mind
The right level and type of life insurance can give you peace of mind, so that if you’re not able to work due to serious illness, injury or death, and your circumstances meet the requirements to claim under your insurance policy, there could be less of an impact on your family’s ability to manage its financial commitments than if you did not have any insurance cover. If you meet the requirements of your policy, it might provide you or your family with a lump sum or ongoing payments. Having the right level of cover is all about trying to minimise any disruption to your family finances at an already stressful time.

 

Disclaimer: Please note that Australian Ethical can only pay a claim for insurance where the Insurer has accepted the claim and paid the insured benefit to the Fund and you satisfy a condition of release for the payment of the benefits from the Fund. For information on what is a condition of release, please visit the ATO’s website. This information is of a general nature and is not intended to provide you with financial advice or take into account your personal objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances and read the product disclosure statement (PDS) and Insurance Guide, available at australianethical.com.au/super/pds. You may wish to seek independent financial advice from a licensed or authorised financial adviser before making an investment decision. Interests in the Australian Ethical Retail Superannuation Fund (ABN 49 633 667 743, USI AET0100AU) are offered by Australian Ethical Investment Limited (ABN 47 003 188 930, AFSL 229949) and issued by the Trustee of the Fund, Australian Ethical Superannuation Pty Limited (ABN 43 079 259 733, RSE L0001441).

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