For employed Australians who become ill or injured and are unable to work, there’s generally a range of benefits potentially attached to their superannuation to help them cope during these challenging times.
But if you’re self-employed or you’ve set up your own self-managed super fund (SMSF), accessing the same benefits if you get injured or sick is not so clear cut.
That’s why it’s so important you know about and have the insurance policies in place with your SMSF—and get the right advice on how to make a claim.
In this article we’ll look at tips to know what policies to look for with your SMSF, and, should the unexpected happen, what you need to do to help you make a successful insurance claim through your super.
We’ll also look what you can do if you’re knocked back on an insurance claim through your super—whether it’s self-managed or employer-funded—and the good news is, you have options.
Understanding the basics - how your super and insurances may be structured
If you’re an employee in the workforce, your employer makes mandatory contributions to your super fund. Your super fund usually also offers insurance cover should you suffer the unexpected.
You may be able to access a range of benefits that form part of your employer-funded superannuation fund membership if you are injured or ill. For example, you may be able to claim for:
- Total and permanent disability (TPD)
- Income protection
- Trauma insurance
- Terminal illness
- Insurance litigation.
You’ll find more information about making a claim for these different types of cover on our Superannuation and Disability Insurance page.
Self-managed super fund (SMSF)
The other type of super fund is one you set up yourself—the SMSF.
This is quite common for small business owners looking to simplify their funds, and build some security into their future plan.
Most people see a financial advisor to set up their SMSF, as there are complex considerations about how to structure it (more on this later).
Many people starting their own business may have multiple previous employer-funded super funds, and want to combine them all into a single SMSF.
Why you may be more vulnerable if you are a business owner with a SMSF
While a SMSF suits many people, you may be more vulnerable if injury or illness strikes because:
- Unlike employees who can use sick leave or long-service leave to cover themselves while they’re unable to work, a self-employed person has to support themselves.
- Even if you’re eligible for government benefits, there’s usually a delay accessing these.
- If you have assets such as property, you’re unlikely to be eligible for assistance—and will have to support yourself from your hard-earned savings.
Get the right insurance cover sorted with your SMSF fund
Because of these challenges, it’s vital you get the right type of insurance cover attached to your fund. It will reduce your exposure financially if you’re injured and unable to work for an extended period.
And to make sure you set it up in the best way to protect you now and in the future, it’s a good idea to get a financial expert like a credible financial advisor to set it up for you.
Your financial advisor will advise you how to structure your existing insurances under the new single fund.
What are the types of insurance to have with an SMSF?
Like an employer-funded super fund, it’s important you have the following as a good base to make sure you’re not going to be out of pocket if you’re unable to work due to injury or illness:
- Income Protection
- Terminal Illness.
A common trap to watch out for when setting up your SMSF and insurance
If you were previously paying premiums for insurance policies attached to other super funds, you risk losing the cover under those previous funds when you roll-over to the SMSF.
So, it’s definitely wise to seek professional advice from a financial advisor before you make the switch.
What should you do if you need to make a claim through your super?
Making a claim through you SMSF is complex and technical—even for lawyers—particularly if they don’t specialise in this area.
Anyone wanting to access their super-related insurance should go to an independent legal expert who is experienced in this work, and knows what the insurers are looking for.
There are risks in trying to navigate claims on your own - and some actions are irreversible - and you could end up missing out on much-needed cover.
- If you have more than one type of insurance cover, depending on how your policies are set up, it might be that you can’t claim on one type if you claim on the other; or
- The order in which you claim on the policies could become critical to maximising the payout.
What can you do if you’ve had a rejected claim?
Unfortunately, we’ve heard of too many people having claims rejected.
And one of the most common reasons is they didn’t disclose a key piece of information when they took out the claim.
Insurers will often jump at a chance like this to avoid paying out benefits—and our clients are none the wiser as to whether the insurer was within their rights.
But if this has been your story, the good news is, it doesn’t have to be the end of the road for you.
In both these situations, we’ve worked with many clients to investigate what insurances they have, and, if cover is available, make a successful claim.
How Slater and Gordon help our clients
Our insurance and superannuation team have helped hundreds of Australians who have recently suffered an injury or illness and are no longer able to work understand or make claims through their SMSF.
We help them find out if:
- Their insurance policies will cover them financially during their recovery
- Their condition has made them permanently unable to work, whether they can seek a lump sum payment through their TPD cover
- They’ve had a claim to access super-related insurance rejected by the insurer, what went wrong and how and if it can be fixed.
Before making a claim through your super, we help our clients:
- Identify and assess what documents to submit to the insurer
- How to present them in the most favourable way.
Our team have had experience on both sides of the fence—so we know what the insurers are looking for.
We also provide our clients with access to leading, affordable legal services, including our “No Win, No Fee”* offer, as well as free social work services support upon referral from a lawyer if needed—to help you feel supported every step of the way.
If you have a question, want some more information or would just like to speak to someone, make an enquiry now and our Superannuation and Insurance team will be in touch with you as soon as possible.
You can make an enquiry online or phone us 1800 555 777.
*No Win, No Fee - conditions apply. View here.