Authored by Joshua Boyes, Special Counsel

For most Australians, insurance cover doesn’t come from a broker or a glossy policy. It comes through superannuation. These group life policies are affordable and often automatic. If you’re over 25, have at least $6,000 in your account and are working, you’re usually covered for death, TPD (Total and Permanent Disablement) and sometimes income protection.

That’s the good news!

The not-so-good news is that millions of Australians are underinsured and this automatic insurance cover through Superannuation is usually not enough. Around 1 million people don’t have enough cover for death or TPD, and 3.4 million don’t have enough income protection*.

So how much cover do you actually need?

The right way to go about accurately calculating the cover you need starts with a deep-dive into many factors, including your debts, your lifestyle needs and also the needs of those who depend on you.

There are several businesses and tools that help you get started. Insurance brokers and financial advisors are licenced to give you advice that takes into account your unique circumstances and financial goals. This smart calculator is another handy tool.

Generally speaking

Average levels of insurance cover are available, too*.  For young parents both aged 30 and then 50, the average basic level of death and TPD insurance per insured:

Regarding Income protection, around 75-87% of your pre-disability income is generally an acceptable amount of cover to ensure you can sustain your lifestyle needs and the needs of your dependents even at a time when you are unable to work.

Have a look at your payslip, then have a look at the insurance cover through your superannuation membership statements. Is it enough? For many, the automatic cover in super simply doesn’t meet these benchmarks.

Increasing your cover

You can apply for more insurance through your super fund.  In some cases, you don’t even need to provide medical history, for example, if you’re applying for a small increase, or after life events like marriage, divorce, having children, or taking on a new mortgage.

There are other options available where you can obtain insurance cover with retail “standalone” policies direct with the Insurer, too.

If you make a fresh application with a new Insurer, or you apply to increase your cover than certain levels with your existing Insurer, you will need to disclose your medical history. That’s where many people hesitate.

Why disclosure matters

It is a duty required by law (the Insurance Contracts Act) that those applying for insurance cover disclose anything that they know, or a reasonable person would know, to be relevant to the Insurer in assessing the risk they are willing to cover.  An Insurer should expressly bring to your attention these duties to disclose (usually it is on the application form you are completing in obtain/increase your insurance cover).

My strongest advice is when in doubt, disclose. Share everything, even minor issues, old injuries, counselling sessions or other niggles. It’s a one-off process. Once cover is in place, you don’t need to update your insurer every year like you would with car or home insurance, unless you’re looking for more insurance cover later.

Being upfront protects you later. If an insurer tries to deny your claim because of “non-disclosure” or “misrepresentation”, you can show you did the right thing from the start.

Exclusions and how to fight them

After you’ve completed your application and met the requests of the Insurer, they may offer you insurance cover but with exclusions. This prevents you from claiming on certain conditions.  The exclusion might look something like: “no benefits are payable arising out of any cause due to any disease, disorder or injury to the knees/back/shoulder, etc.”, or “arising from or contributed to by stress, fatigue, physical symptoms of a psychiatric illness”.

As well-considered or sometimes convoluted/confusing as these offers seem, don’t just accept it, as you may be accepting terms for inferior or insufficient cover. This is your time to challenge these decisions about your insurance cover. Insurers can be challenged and can be convinced otherwise if the exclusion isn’t fair or supported by evidence. This can be done internally with the Insurer, or if you do not obtain the outcome you want with them, often through the Australian Financial Complaints Authority.

The genetics question

Genetic testing is becoming more common, and it raises new questions for insurance. At present, insurers in Australia have agreed to a moratorium: they won’t use genetic test results to assess the risk they are willing to cover if you’re applying for cover under $500,000 (death/TPD) or $4,000 per month (income protection). Above those amounts, disclosure will usually be required.

The moratorium limits are usually far below the recommended/average levels of cover, which creates a gap. But my message is clear: don’t avoid genetic testing out of fear of insurers. Understanding your health risk is too important. Use that knowledge to look after yourself, and if disclosure becomes an issue, use that knowledge to challenge the Insurer.  This is also where legal advice helps.

Insurance through super

Insurance claims through super can be life changing. But only if it’s set up properly. Disclose everything, challenge unfair exclusions, and make sure your cover is strong enough to protect you and your family.

At Margalit Injury Lawyers, we have a team of experts helping people with TPD and super insurance claims and disputes. If your claim has been denied or you’re unsure about your cover, we’re here to help.