Is your superannuation fund protecting your income?
When it comes to income protection insurance, many people think that they have adequate coverage through their superannuation fund. Unfortunately, this may not be the case. To help you determine if your super fund gives you appropriate income protection, we have compiled 5 steps you can take.
1. Determine the level of income protection coverage you want
The amount of coverage you need depends on where you are in life. If you don’t have many financial responsibilities and would feel comfortable living with the basics, you may opt for lower levels of coverage. Conversely, if you have a family or small business, you may need more coverage.
2. Determine the level of coverage you have and assess if it is sufficient
Once you have determined the level of coverage you need, you should contact your superannuation fund to find out your current level of coverage. While some funds offer adequate coverage, this is not always the case. Once you understand the level of cover you are being offered, look at your required coverage and determine if there is a gap. A small gap may not seem like much but if you think of the impact that gap may have over 6 months to a year, you may realise that you need to increase your coverage that leaves no gap.
Learn more about Citibank's Income Protection Insurance today.
3. Determine if your insurance is flexible enough for you
Many superannuation funds are not as flexible as insurance providers but they may still offer the options that you need. Find out if the level of cover and coverage term are what you need. You may also want to find out if you can increase your coverage should your income and obligations increase. Stand-alone insurance providers are usually more flexible and have more options. For example, Citibank Prime Income Cover offers coverage up to 75% of your income up to $10,000 a month. You can adjust your level of coverage and decide on your coverage time (6 months, 1 year or 2 years).
Many superannuation funds are not as flexible as insurance providers but they may still offer the options that you need.
4. Determine if your waiting period is adequate for your needs
Most income protection insurance policies have a waiting period. To determine the waiting period which would be adequate for you, consider the amount of your savings and any accrued sick and annual leave and determine how long you could cover your costs should you fall ill or become injured. Contact your superannuation fund to find out whether there is any waiting period before you can submit a claim. If the waiting period is not sufficient, you may wish to consider an alternative insurance provider. Citibank’s income protection insurance allows you to choose either a 30 or 90 day waiting period.
5. Determine how your insurance premiums affect your future
Generally when you are paying premiums through a superannuation fund, the payment is deducted from your overall fund balance. If you are opting for income protection this way, you may wish to consider paying more into your superannuation fund to counteract this affect. Conversely, with a stand-alone insurance provider you simply pay the yearly premium which is 100% tax deductible. You can also pre-pay for the year to bring the deduction forward to the current tax year.
While everyone’s situation is different, these 5 steps are a general guide to help you assess whether your income is protected by your superannuation fund. If you find you are unhappy with your current coverage or that you do not have adequate coverage, you can contact a Citibank Insurance Specialist who can help you find a better solution and answer any remaining questions. Your financial future is in your hands but luckily we are here to help you grow and protect it.
Citibank Prime Income Cover is distributed by Citigroup Pty Limited ABN 88 004 325 080 AFSL No 238098 Australian credit licence 238098 ('Citibank'). The issuer of this product is AIA Australia Limited, ABN 79 004 837 861, AFSL 230043. This product is not a deposit or liability of Citibank. The information provided is of a general nature and does not take into account your personal needs and financial circumstances. You should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. You should read the Product Disclosure Statement (PDS) and consider whether this product is right for you. Terms, conditions and exclusions apply as set out in the policy wording.