Stay in control: Five reasons to consolidate your super before June 30
In the lead up to EOFY, checking up on the health of your finances is a smart idea.
Not only does it feel great to get yourself organised for the new financial year, but you could end up saving hundreds of dollars on insurance and bills, including life cover.
Also, it’s important to note that super reforms take effect on October 1, 2019, which could affect your life insurance. Parliament’s Protecting Your Superannuation Package Bill involves shutting down life cover held within inactive super accounts, a move that will potentially save billions of dollars and be helpful to Australian super members in the long run*.
Here are five reasons you should consolidate your super accounts, and review your life cover, before EOFY.
1. Stop paying for inactive accounts
Often, when people switch jobs, they open a new super account with their new employer but fail to transfer funds from the previous super account to their new one. It’s a common oversight – 25% of Australians don’t even realise that they have life insurance worth tens of thousands of dollars held within their super account.
The problem with having multiple super accounts is that the old accounts that no longer receive contributions can still have a life insurance policy held within them and therefore, could still be charging you premiums*. Over time, as the premiums are deducted, this will reduce the balance of your account.
If you have multiple superannuation accounts, with separate life insurance policies held within each one, you may only be able to make a claim with one account. The only way to be sure whether you can claim on multiple insurance policies is to check with your super fund and insurer.
If you are paying for insurance that you can not claim on, you’re shelling out money that you could be investing in your future.
Consolidating your super means you’ll only need to manage one account, saving both time and money in the long run.
2. Ensure you don’t lose cover
Whether you have one super account or multiple, it’s still important to review your existing accounts before October 1, especially if you rely on the life cover held within them.
If your account balance has dwindled to below $6,000, and you’ve skipped your contributions for whatever reason (e.g. you’re in-between jobs, self-employed, on maternity or paternity leave, overseas, etc.) the Australian Taxation Office (ATO) might mark your account as inactive.
If you rely on the life cover held within this super account, you should be aware that it could be wiped out entirely after the Protecting Your Superannuation Package Bill takes effect.
3. Understand what your life cover looks like
Of course, you can decide to ignore the life cover held within your super and let the chips fall where they will – but by doing so, how will you know whether you’re adequately covered? It can pay to know how much cover you hold within super and assess whether that’s enough to cover you and your family.
Not only can this provide peace of mind for you and your loved ones now, but it will allow your beneficiaries to maintain their lifestyle and pay off debts, should the worst happen.
Don’t wait for any nasty shocks on October 1. Consolidate your super as soon as possible and ensure you’re covered adequately with a life insurance policy that fulfils your current needs.
If you’ve accumulated balance in several smaller accounts and failed to transfer them into your current super account, that balance will be turned over to the ATO*. You might be surprised to find you have accounts you didn’t even know about! The ATO will then try to transfer the balance for you into an active super account. If there are no active super accounts, they will hold your balance for you until you contact them to claim it.
4. There are tools to help you consolidate your super
The myGov website makes the process of consolidating super quick and simple. Look at your existing super accounts and choose the one you think will best meet your needs moving forward. Then log on to the website, and roll over your balance into your chosen super account. Done.
You may also have to inform your employer about these changes so they are aware of where to pay your super. Once you’ve consolidated your super, you might want to ask yourself if you’re adequately covered with life insurance.
If you’re unsure, a good place to start adding up how much your family would need to maintain their cost of living until your expected retirement age, plus the cost of any mortgages or outstanding debts. You can also speak to one of our life insurance advisers to compare life insurance policies based on price and features, to ensure you’re getting the best bang for your buck.
5. Reassess your needs: does your cover still work for you?
Perhaps your needs have changed since you first took out life insurance, so reviewing your cover now can help you assess whether your life insurance is still working as it should.
EOFY is a good time to check up on the health of all your finances, and the advisers at Life Insurance Comparison can help by checking if you’re still getting the best deal on your policy. Remember: life insurers update and introduce new products regularly, so comparing policies at least once a year can save you hundreds of dollars.
Life Insurance Comparison can help to simplify the process of comparing cover. We’ll do the shopping around for you and help you score the most cost-effective premium, with both your needs and budget in mind. To get your free quotes, connect with one of our life insurance advisers or view our life insurance comparison tool.