Superannuation & insurance

Tuesday 30 September, 2008

Developed with lawyers from Maurice Blackburn Cashman

On this page: Superannuation benefits ι Superannuation disability claims ι Personal insurance benefits ι Obtaining new insurance or superannuation policies ι Superannuation/insurance and social security payments ι Superannuation/insurance and returning to work ι Superannuation and Insurance Advice

Superannuation benefits

Superannuation has been compulsory since 1992. Many people living with cancer may be able to claim a lump sum or pension if they have a superannuation policy.

Superannuation funds often will pay a lump sum if you cannot keep working because of your illness. This benefit is often provided as ‘extra' on top of your superannuation contribution. Some funds also pay a disability pension 2 years or more.

Many people do not know what or when they can claim from their superannuation fund. Superannuation funds send out statements every year, but they can be hard to understand.

If you're not sure whether you are entitled to any disability benefits, or if you cannot find any of your statements, ask your employer, your superannuation fund or someone who has expertise in this area. 

When must superannuation contributions be made?

Under the superannuation laws, your employer must pay your superannuation contributions into a fund at least once every 3 months. Many employers have agreements with superannuation funds to pay more often, for example, monthly or fortnightly.

Some industrial awards also state that employers must pay superannuation more often.

To find out, read your employment agreement or contact:

What if superannuation contributions aren't paid?

If your employer does not pay superannuation into a fund for you, get help immediately from the Australian Taxation Office, a lawyer who specialises in this area, the Superannuation and Insurance Advice Service or your union. 

Obtaining your superannuation contributions payouts

Contributions you have made voluntarily to your superannuation fund can be paid to you when you leave the fund.

The general rule is that contributions made by your employers to your fund must stay in the fund until you are 55 or 60 years old. However, there are exceptions to this rule.

You can access your employers' contributions to your fund if any of the following applies:

  • You have been on social security payments for at least 6 months (or nine months, if you are over 55 years and nine months of age) and can't pay your living expenses.
  • Your house is about to be sold by a bank or other mortgagee.
  • You need money for palliative care, death expenses, changes to your house or car, or medical expenses outside the public health system for you or a dependant.
  • You are totally and permanently incapacitated.
  • You have a superannuation account balance of less than $200.
  • You are a temporary resident, and leave Australia for good.

Superannuation disability claims

Claiming disability benefits

Many people living with cancer can claim disability benefits.

To get a disability lump sum, you usually have to show you can't ever go back to your previous job or any other suitable work that fits your education, training or experience.

For example, if you have worked all your life as a labourer or process worker, you will have to show that you cannot do manual work again.

It doesn't matter how a disability or illness came about. All disabilities and illnesses are acceptable for a superannuation disability claim. Many people on social security benefits will be able to claim. 

Making a disability claim

You can usually make a claim any time. It doesn't matter if you have already had your superannuation contributions paid out to you, even if that happened a long time ago.

Disability claims can also be made by the estate of a person after they die. There will be claim forms to fill in and medical reports and other papers to send in. It is important to give the right information and reports to help a disability claim. It may take many months before a decision is made. You may be asked to go to some medical examinations.

If a claim is rejected, you can appeal to a court or the Superannuation Complaints Tribunal. It is often worth appealing, as many appeals settle before they reach court or are successful when they are heard in court.

It's important to get help from a lawyer experienced in insurance claims or appeals. To find a lawyer who specialises in this area, telephone the Law Institute of Victoria Referral Service on 9607 9550.

Superannuation death claims

Superannuation funds pay death benefits to the dependants or the estate of a deceased person. In most cases, the superannuation fund trustee is not bound to give benefits to your nominated beneficiaries.

A decision of the superannuation trustee can be appealed. Contact the Superannuation and Insurance Advice Service for assistance.

Personal insurance benefits

Some people living with cancer may be able to claim disability benefits from other insurance or superannuation policies that they hold. 

Types of insurance policies

Some people have their own superannuation or life insurance policies that may include disability lump sums or ‘premium waiver benefits'.

Premium waiver benefits are when the insurance company pays your premiums for you when you can't because you are ill and/or not working. Most self-employed people have income protection insurance to cover their loss of income if they can't work.

Banks and finance companies sometimes ask their customers to take out insurance to cover mortgage or loan repayments if they can't keep up the payments because of disability. You will need to check with your bank or your personal records to find out if you are covered.

Some credit cards include disability lump sums as a benefit. You will need to check with your credit card provider to find out if your credit card has such a policy. Some banks, employers, unions, credit unions and sporting and social clubs have disability insurance policies for their members.

You should check your records with each organisation or with the Superannuation and Insurance Advice Service.

Making claims and appeals

Insurance disability claims can usually be made at any time although it's better to make a claim as soon as possible.

There will be insurance claim forms to fill in and medical reports and other papers to send to the insurance company. It is important to provide the right information and reports to help your claim. It may take many months before a decision is made, and you may be asked to have some medical examinations.

If the insurance company rejects your claim, you can appeal their decision to a court or to a low-cost insurance complaint scheme. You can get help from the Superannuation and Insurance Advice Service. 

Obtaining new insurance or superannuation policies

If you already have cancer, it may be difficult to take out a new policy which includes disability or death benefits.

If you try to take out your own insurance or superannuation policy, you will usually have to fill in a medical questionnaire for the insurer to calculate your health risks and decide whether they wish to cover you.

If you know you have cancer, in most cases you will have to tell the insurer. They may then refuse to cover you for disability payments.

If you know that you have cancer when you join but do not tell the insurer, then they may refuse to fulfil their obligations and will not pay disability payments to you. However, this is not always the case. If you have had cover for more than 3 years, an insurance company may only refuse to pay you or reduce your payments if:

  • you did not tell the insurer about your condition when you started your insurance cover; and
  • your failure to disclose that information was meant to deceive and dishonest.

It may be possible to get insurance that includes disability and death cover by joining a ‘group' superannuation or insurance scheme, for example, with your employer or your union or credit union. In such schemes, you may be offered automatic cover without any health tests or questions.

Superannuation/insurance and your social security payments

In determining the amount of social security you are entitled to be paid, the value of your assets and any income you receive will be taken into account. This will include the following payments.

Superannuation lump sums

Any superannuation lump-sum you're paid will usually be taken into account in an assets test to work out the amount of your social security payments. However, if you keep the money in a superannuation fund, it will not count as an asset until retirement age.

Superannuation pensions

Superannuation pensions are treated as income, and may reduce your social security payments.

Insurance lump sums

An insurance lump-sum payout will be taken into account in the assets test to work out the amount of your social security payments. 

Insurance income/pension payments

Payments from income protection insurance are usually treated as income, and may reduce your social security payments.

Superannuation/insurance and returning to work

If you've stopped work because of cancer, you can return to work if your health improves and you feel that you are able to go back to work. If you do go back to work and you have already been paid a superannuation or insurance disability lump sum, you will not have to repay the lump sum.

If you are receiving a superannuation or insurance pension, you have to tell the fund or insurer that you are returning to work. If you do not tell them, you may be liable to repay any payments you received. If you return to work, and you are earning more than $450 per month, your employer will once again have to pay your superannuation contributions.

Your new superannuation fund may also include death and disability benefits even though you have cancer.

Superannuation and Insurance Advice Service

Need to get advice?

Many people do not know that they can claim disability benefits from their superannuation or insurance. If your working life is cut short, you probably won't have enough superannuation. Extra disability benefits will help you. This is because your superannuation is designed to last for an ‘average' period of retirement, not longer. 

Where can I get help?

The Superannuation and Insurance Advice Service is a free service. It has been set up to provide legal advice to people with disabilities. The advice is given by volunteer lawyers. The service is based in Melbourne. You can get free advice by telephone or by appointment. Telephone the Chronic Illness Alliance on 9882 4654.

You may wish to ask lawyers with expertise in superannuation and insurance for advice or see a financial counsellor. To find a lawyer who specialises in this area, telephone the Law Institute of Victoria Referral Service on 9607 9550.

The information on this page is brief, and may not be relevant to every claim. Superannuation is a complex area of law. It is important that you get specialist advice.

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