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The types of insurance cover that may be available to you through your super are death, total and permanent disablement, and temporary salary continuance cover.
Death cover
Death cover pays a lump sum amount if you die or become terminally ill. This can provide valuable protection for your dependants.
Having a current Nomination of Beneficiary will speed up the payment of any lump sum death benefits. To remain current, you need to update your nomination every three years. A binding Nomination of Beneficiary will ensure any death benefit in your super is paid as you have specified.
Total and permanent disablement (TPD) cover
TPD provides a lump sum to help cover your living expenses and rehabilitation costs if you become totally and permanently disabled.
Where a TPD payment is made to you out of a super fund the trustee may not release the funds until your retirement if you are still able to work in some capacity. This is usually only a concern for some TPD “own occupation” definitions. The payment is generally tax free, but capital gains tax may apply if the benefit is paid to a non-relative of the person insured.
Temporary Salary Continuance (TSC) cover
TSC provides a monthly income of up to 75% of your salary if you suffer an illness or injury and become unable to attend to your normal duties. This can be paid for a maximum period of two years within your super, where a policy taken out outside super could cover you to age 60 or 65 years.
The issues can be complex and it is important to ensure you have the right type and level of cover. A financial planner can help you to work out what cover you need and whether paying for your insurance through your super fund is right for you.
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