I am medically vulnerable and very concerned about catching COVID-19. I don't have any savings apart from my small industry fund super balance ($6,000). My job is uncertain, and my income has dropped by over 50% in the last few months because of the virus. I am worried about whether my insurance in my super fund will cover me if I lose my job. I am also worried I may not be able to claim on my insurance if I get sick from COVID-19 because I heard that insurance policies do not cover pandemics. What should I be doing to make sure I am covered?
Louise in Dapto, NSW
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Have you spoken to your employer about whether they (and therefore you) are eligible for the JobKeeper payment? To help people whose income has been affected by Coronavirus, the Government has measures to help and are currently paying $1,500 per fortnight to anyone who is eligible. This was due to cease in September but has now been extended into 2021, though the rates will change, and work tests will be introduced.
If you are worried about the insurance in your Super fund, I would give your fund a call and let them know that you do wish to continue this cover. With a balance of less than $6,000, and depending on how often you contribute, you may find the fund opts to cancel your cover if they are not aware you wish to retain it.
Please note that insurances that we hold in our Superannuation are personal insurances that pay out if you are unable to work because you personally fall ill or are injured. It does not cover you for redundancy or because an employer needs to cease your employment for their own financial reasons.
If you are concerned about whether you would have cover due to health issues form a pandemic, I would ring your industry Super fund and get a specific answer from them, or look at the Product Disclosure Statement (PDS) or Insurance guide which is their general booklet that can be found on their website. Most providers do not in fact exclude pandemic illnesses, though some providers will not cover a declared pandemic illness that is caused by the pandemic within 30 days after your cover starts. A full insurance review with a qualified adviser would be a good way of knowing what cover you require, what cover you have at present, and therefore where your gaps lie.
On a final note, if you really are struggling financially, the government has provided some relief measures where you are able to draw funds from your Super Balance up to December 2020. While this may provide short term relief, Australians do need to be aware that this is not a hand-out – It means we are utilising our money that was set aside for our retirement, and this decision to use our Super should therefore not be taken lightly. Other considerations are that if you did redeem your entire balance your Insurances would cease.
All the best.
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