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From 1 July 2015, terminally ill Australians with a life expectancy of two years or less will be able to access their superannuation early on hardship grounds. Previously, only those who had 12 months or less to live could get early release of their superannuation.

Giving terminally ill patients even earlier access to their superannuation funds makes a lot of sense and is good policy. The terminally ill usually suffer financial hardship because they are typically forced to stop working. Many of them need access to additional funds to pay for day-to-day expenses - like medical bills and mortgages.

But it is important to consider the effect that early access to superannuation could have on your existing superannuation insurance policies.

Most superannuation account holders pay premiums so that they have access to insurance benefits including life insurance and total and permanent disability insurance (TPD).

Each insurance policy is different, but often they allow the life insurance benefit to be paid as a terminal illness benefit if someone is diagnosed with a terminal illness and has a life expectancy of less than a year. The terms of insurance policies are not changed by the new regulations.

These insurance benefits can be worth tens or hundreds of thousands of dollars depending on the fund and may not be available once the super funds are withdrawn and the account shut down.

It is important to seek independent financial and legal advice as there may be benefits available through superannuation that will further assist a dying person and their family to secure their financial future.

Are you also entitled to make a TPD claim if you are no longer able to work? Would you be better off making a terminal illness claim? Do you want to leave some money in your super account so that you continue to have life insurance coverage for your loved ones?

People with a terminal illness need to be aware of their full entitlements so that they do not miss out on what is rightly theirs.

Thank you for your feedback.

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