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
Hi Louise,
It is completely understandable that you would be very concerned with Covid-19 given the recent second wave in Victoria and its continuing spread around the world with no cure as yet. It is best to follow the guidance from the government on social distancing, wearing masks in public, and on hand hygiene to keep yourself safe.
With regards to pandemics or epidemics, Canstar (Australia’s largest financial comparison site) has not identified any life insurance policies that exclude pandemics or epidemics altogether. Therefore, most if not all insurance policies will provide protection even in a pandemic situation. However, it would be prudent for you to check with your insurance provider in your super fund.
If, however, you are a healthcare worker and took new cover out between 11th March 2020 and 6th of April 2020, you should check with your insurer as some did have exclusions during that time to covid-19. From 6th April 2020, insurers were allowed to collaborate to ensure front-line healthcare workers didn’t face exclusions.
To be covered for loss in income, you would need to have Income Protection or Salary Continuance covers (either in your super or outside). This insurance will cover you only if you are unable to work due to sickness or accident. These covers unfortunately do not cover for loss in earnings or in the instance where you lose your job.
Most industry super funds offer default cover of Life and Total and Permanent Disability. However, these are only paid out upon death or disability of the insured member. Again, these would not be of any help in the case of job loss or loss in earnings due to the economic environment we are facing during this Covid-19 pandemic.
It is important for you to check with your super fund as to what covers you have in place as part of your super policy. You should then seek advice from a financial adviser to look at what insurance you should have in place to cover you and your family in case of an unforeseen event. The adviser should also be able to help ascertain what government covid-19 economic provisions could be of assistance with your job and income loss should you need it, such as accessing your super, jobseeker, etc. to name a few.
These are extremely difficult times, but we will all get through it together. Wish you all the best.
Response provided by Aziz Meherali from Elixir Private Wealth.
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Comments1
"Of the three responses this is the most accurate in insurance terms. But none of the responses addressed the issue of the nature of her employment ie casual or permanent. She mentions a "small industry fund", which probably eliminates HESTA, which incidentally was one of two funds that had a pandemic exclusion way back in February. Both HESTA and the FSC have supposedly sorted that problem. I would be checking the funds PDS (not the"brochure")for severity applicable to casuals. Remember 25% of our workforce is casual I would need to know the nature of employment and sight the Definition of TPD applicable to casual workers. Some funds discriminate against casual workers, applying the ADL test , not the Any Occupation"test. Applying for a total & permanent disablement benefit (TPD) to a super Trustee under an ADL definition is tough, and remember two(2) medical specialists must concur I would also strongly warn this client that applying for any life policy after COVID is over, whether in retail or in group super, will be difficult because re-insurers are tightening underwriting as we speak. In other words at all costs try to keep the existing cover"
Bill Brown 20:14 on 29 Jul 20