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The Australian Super advert gives me the sh*ts!
“If you have more than one super fund, come to Australian Super and we will consolidate them.”
This Australian Super ad highlights that putting all your superannuation into a single fund can be a good idea because it means you can manage and track it more easily. Unfortunately, it’s somewhat of a simplistic view as this strategy can also come with severe drawbacks.
The most significant potential negative when consolidating super is the loss of any insurance benefits accompanying your different super funds. This isn’t an issue for everyone, but blindly putting all your super into one place can be catastrophic for some of us, like me.
Given two of my closest relatives (my sister &and mum) were diagnosed with cancer before the age of 36, I am not the most sought-after insurance policyholder. The automatic cover insurance I receive through my super fund accounts are worth their weight in gold, and my premiums are lower than if I consolidated my super to the wrong place. I am also covered for more health conditions.
What is automatic cover insurance?
Often, just by keeping your super in multiple funds, you are automatically entitled to certain levels of insurance. For example, you might be eligible for death, injury or disability cover.
When consolidating your super, you may find the cover is either no longer available or expires after a certain period of time, meaning you’re no longer entitled to the relevant payments. This can be an unfortunate issue in the long run, as any insurance benefits can make a marked difference to a family’s financial situation if an individual unexpectedly passes away or suffers a traumatic health event.
The take-home message?
Consolidating super into one fund can appear to be the right option, but it’s not as simple as most people think, and it’s important to understand the risks involved.
With the possibility of extra costs or exiting fees, plus the potential loss of insurance coverage, it’s essential to take the time to consider whether consolidating your superannuation is the best decision for your future.
Need some advice on this topic? Get in touch with our team today.