It’s a common misconception that can leave your clients unprotected. If you think you are covered in your super, check your cover carefully because it’s often life cover and NOT trauma. This means that you will not receive any cover if you are unable to work due to serious illness or injury - a time when you will probably need it most.
Before 1 July 2014
Critical illness cover could be provided via superannuation (providing your fund allowed it). However, if you made a claim the proceeds were paid directly into your superannuation fund. In order to access them you needed to meet stringent conditions of release in line with the rules governing the superannuation industry. Generally superannuation proceeds are only available at retirement, death, total and permanent disability or terminal illness. This meant that there was a huge risk that you could be eligible for a claim, but unable to get the claim proceeds physically out of your superannuation fund when you needed them the most.
As of 1 July 2014
No new critical illness insurance via superannuation can be offered by super funds. This is because there is no condition of release consistent with critical illness which would release the insurance benefits if there is a successful claim on the insurance contract.
The statistics speak volumes: