Wednesday 29th August 2012
Nurses are now more vulnerable to financial distress if they are injured, thanks to the State Government’s changes to workers compensation. The Lamp asked health sector industry super funds how they can help.
HESTA CEO Anne-Marie Corboy says Australians are underinsured even though the stakes can be high for not doing so.“Australians will insure their house or their car but not themselves. This (insurance) can be life saving for families,” she says.
Anne-Marie says the changes to workers comp in NSW are a moment for nurses to reflect on what they need to do to make sure they and their families have protection in the event of an injury. “Insurance is really important. It is an opportune time to assess what you’ve got.”
If you are a member of HESTA and you don’t opt out you get 2 units of death cover and 2 units of income protection for those who can’t work on a temporary basis or on a permanent basis.
If your injury is temporary you are covered by income insurance for two years. After two years you need to be permanently disabled to get the benefit which is paid to age 67.
Anne-Marie says HESTA improved the length of cover following changes to the age eligibility of pensions. “With the aged pension now extended to 67, we’ve extended the cover to 67. It’s unique – not many funds offer this. So, for example, a nurse who is 35 who is injured at work with permanent incapacity is entitled to the benefit till age 67.”
HESTA allows you to increase your cover and Anne-Marie says “we encourage members to do so”.
“All the information is on the HESTA website along with a calculator to assess what your needs are and what it would cost to meet those needs.”
This year HESTA introduced a Life Events Option which allows members to increase their Death and Total and Permanent Disablement cover or their income protection on achieving a life milestone without providing medical evidence.
These milestones can include obtaining a tertiary qualification, getting married or divorced, giving birth, turning 25, 30, 40 or 50 years of age or when taking out a mortgage among other events.
If you go on parental leave you get 12 months cover at no cost.
Anne-Marie says the big advantages of getting your insurance from your super fund are the competitive cost and the fact that premiums are deducted from your super account. “Most will find that it is cheaper than a retail policy. The group buying by the super fund gives a lower premium and so long as there’s enough money in your account to cover the premiums you don’t have to worry about remembering to pay for them.”
First State Super
Karen Volpato, First State Super’s marketing manager, knows from personal experience the importance of having back-up in case you are injured at work.
“It’s just so critical. In my past jobs, I’ve seen families wonder how they can cope because insufficient insurance cover has been taken out” she says.
Karen says that if a nurse is a member of First State Super through the NSW Public Sector or through a private sector employer who has signed up with the Fund, generally they are entitled to default insurance that covers death and total and permanent disability. “This default insurance is a good start. If they are totally or permanently incapacitated or they die they get this cover if they meet the definitions. For example, if you are 25 you would get about $250,000 as a lump sum. If you were 45, you would get about $129,000. If you were 53, you would get about $45,000.”
These insurance scales decrease with age as they are based on assumptions of what you would have put into your super by that age. Karen says if you are proactive you can build even more security into your life for a small additional cost by taking out income protection insurance which sits on top of the default insurance.
“Income protection can cover you for up to 2 years after your injury. You can choose a scheme that will cover 50% of your income or 75% of your income. And you can choose to be paid over two years or over 5 years.”
First State Super has start-up bonuses of insurance cover which you can apply for when you join the Fund. You have 180 days to decide if you want to take extra cover on top of the default cover.
Karen says the Fund has some very useful online tools to help with making decisions and to facilitate processes. “Generally, you can be assessed right away on our website through Insurance Express Online. You can calculate how much cover you need, how much it will cost or apply to transfer your insurance from another fund or from an insurance company.
“We have a financial planning service as well (www.fssfp.com.au.) They can also give advice about insurance — and other things as well. I used to manage claims in another fund so I understand how important insurance is. I’ve taken out additional cover and I’ve got income protection. You can have extra units of cover (the value of which decreases with age) or fixed amount cover (which doesn’t decrease with your age) to make sure your debts are covered. I’ve done that as well. My husband will have that covered if anything happens to me.”
Health Industry Plan
Health Industry Plan (HIP) CEO Ross Bernays says there are no two insurance offerings that are exactly the same, but he is sure that industry super funds offer the best deal.
“The advantages of the industry super funds is that the insurance attached to super is done on a group basis therefore the funds through the insurer can give a wider range of cover for lower premiums. It is hard to compare apples with apples. Other industry funds options are not better or worse they are just different.”
Ross says if you are in an industry fund you generally have automatic cover on entry at a minimum level, but you need to assess whether that is appropriate for your individual circumstances.
“For example, if you are a young person you may not have to worry about a mortgage, compared with a family breadwinner with other responsibilities.”
All nurses who are members of an industry fund most likely have some death cover offered on a default basis. As you get older your insurance cover goes down as your super goes up but even then you get “aggregated substantial cover”. You should review and check your insurance periodically to ensure that you have sufficient cover.
“HIP takes a different view to most. We have compulsory income protection if you are unable to earn income because of health problems. Where most funds offer Total or Partial Disability (TPD) with the option of taking out income protection, we take the reverse. It has a more immediate benefit and the more who have it the less the premium.
“Our emphasis has always been on death and income protection (IP) as opposed to death and TPD but TPD is offered as an optional extra. You can get up to 75% of your salary, which runs for two years via your income protection insurance.”
HIP’s rate of cover for income protection is $1500 per unit per month. Each unit costs 91c. The minimum amount is four units, which gives you $6,000 per month income protection. You can take out more and there is no medical assessment on entry.
Ross says everyone should review their insurance to ensure adequate cover especially with the introduction of the new workers comp changes in New South Wales.
“You should have an eye to the future. It is easy to put it in to the ‘later on’ or the ‘too hard’ basket. If you take an interest in super it is better to do it sooner rather than later. Extensions to existing insurance are usually subject to medical assessment, which may be harder to satisfy, as you get older.
“There is a simple way to start. Think about your needs and your likely needs then extend your cover so you protect yourself.”