“My superannuation does not offer TPD insurance. Should I look at taking out a TPD policy with life cover or perhaps find an alternative superannuation fund? I am in my 30s with no dependents."
- Question from Farah in Gawler, SA
Top answer provided by:
Kieran Menzie
Hi Farah,
Thank you for submitting such a great question around insurances – a topic that most people in their 30’s don’t think about, but should be thinking about.
In terms of your super fund not offering TPD cover, you may be able to apply for insurance through one of the major insurance companies, and have premiums paid via your super fund (by an annual rollover from your super fund to the insurance company).
In terms of getting insurances though, generally speaking, in most instances, it would be best to not only have TPD cover, but all the four major type of insurances. This will ensure that if you are unable to work due to an injury, illness or accident, you may be covered initially and potentially ongoing.
In summary, there are four main types of insurances:
1. Life insurance focuses on providing financial support to your beneficiaries upon your death.
2. TPD insurance provides a lump sum benefit if you become totally and permanently disabled and unable to work.
3. Income protection insurance offers a monthly benefit if you're unable to work due to illness or injury.
4. Trauma cover pays a lump sum benefit upon the diagnosis of specific critical illnesses or medical conditions.
Further information around the four above types can be found here.
Although you may not have dependents and are still young, typically the younger you get these insurances, the easier it is (and cheaper).
When people apply for insurance in their mid-40’s or later, their medical history often may cause a specific exclusion if you needed to make a claim, or an extra premium loading on their policy.
In terms of structuring the above four insurances, all can be held inside a super account except for Trauma cover. There are specific features and benefits for holding Life, TPD and Income protection outside super but if cashflow is an issue, these can be held inside super (again, if your super fund doesn’t allow it, you may be able to set this insurance up with one of the major insurers and they can request the premiums to be paid via an annual rollover from your super fund).
Further information around holding your insurance inside super can be found here.
If you were to ask me though, which of the four insurances mentioned above is most important, I would actually say Income Protection.
Your own income generating capability is your biggest asset and so if this is taken away due to injury or illness, you are still going to need money to pay for your ongoing day to day living expenses – this is where income protection can kick in!
Further information around income protection insurance can be found here.
If you wanted me to run an insurance quote for you, or if you just wanted to have a general conversation around insurances, please feel free to reach out, I would be happy to help!
Kind regards,
Kieran Menzie
While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.
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