Review personal Insurance coverage
The only types of insurance cover that are available to members of superannuation funds
are:

Life Insurance;

Total and Permanent Disability (TPD); and

Temporary Salary Continuance (TSC)
The insurance is usually provided by an insurance policy that is usually negotiated between
the trustee of the superannuation fund and an insurer. The alternative is for the trustee is
“self insure”.
When insurance is offered to a group of superannuation fund members it is known as
“group cover”.
Members, when applying for insurance are usually obliged to provide some information
about their health to the insurer.
Insurance is used as a means of managing risk or minimising your exposure to potential
financial loss. We would be pleased to assist in the evaluation of your exposure to risk and
to arrange appropriate insurance on your behalf where appropriate. Below, we have
included our recommendations with regard to specific risk management areas.
Life Insurance
An important aspect in planning for your retirement and building financial security is to
ensure that you are protected against the unexpected. The only way that you can be 100%
certain of having a lump sum paid to your loved ones in the event of your death is by having
appropriate life insurance.
Term Life Insurance provides a lump sum to your family, should you pass away during the
term of the policy.
Total and Permanent Disability Insurance
You should also consider total and permanent disability cover, to maintain your family’s
lifestyle in the event of your disablement. The definition and application of total and
permanent disablement varies from insurer to insurer. However, three general variations
are applied. Naturally the more generous the benefit, the more expensive the cover.
The variations relate to the insured’s inability due to disability to perform:
 their usual occupation
 an occupation for which they are qualified by reason of education, training and
experience
 any occupation
Trauma Insurance
With the remarkable advances in modern medicines, more and more people are now
surviving major traumas such as heart attack, cancer, coronary artery surgery etc. However,
the recovery period and the cost of care associated with such illnesses normally places
extreme financial strain on the person suffering the illness.
For this reason a relatively new form of insurance has recently been developed. Known as
“Trauma Insurance”, “Crisis Care” or “Dread Disease Cover” this insurance pays a lump sum
to the insured person upon diagnosis of one of a number of specified conditions. Such a
payment will assist you and your dependants to be financially secure. While the payment
may be used in any way you like, you may wish to pay for medical expenses not covered by
Medicare or your health fund, to clear any liabilities you may have, or to take care of bills
and expenses. This insurance cannot be provided in a superannuation fund because it would
be paid in circumstances other than a condition of release.
Income Protection
As our income is generally seen as our biggest asset, it is extremely important that this asset
is protected. Income Protection is designed to replace income in the event of illness or
accident, which means less strain on savings, investment income and other assets.
The maximum permissible cover is typically 75% of your personal exertion income (including
salary sacrificed superannuation contributions). It is extremely important that any income
protection policy recognises and covers your applicable employment structures and
circumstances.
Benefit periods for this type of insurance vary and as such alter the premium of policies.
Typical benefit periods range from 2 years, 5 years, to age 55, 60, 65 and Lifetime.
The waiting period before benefits are paid will also alter the premium for income
protection insurance. A short waiting period is generally designed to suit those who could
be in financial difficulties very quickly if their income stream stops. Your sick leave and
annual leave entitlements should be taken into account in deciding the appropriate waiting
period.
Useful websites:
Australian Prudential Regulation Authority (APRA)
Australian Securities & Investment Commission
The Reserve Bank
Australian Taxation Office
Australian Competition & Consumer Association
Thomas Group Financial Planning
www.apra.gov.au
www.asic.gov.au
www.rba.gov.au
www.ato.gov.au
www.accc.gov.au
www.thomasgroup.com.au