Elevate Income Insurance Superannuation
Protecting your income is one of the most important things you can do for yourself and your family. As devastating as the loss of your house, your car, or your contents would be, they are momentary setbacks, since they are all material objects.
On the other hand, if you lost your ability to earn an income, your family would be in serious trouble. Without money coming in regularly, the bills would pile up, along with letters from collection agencies.
But you don’t have to start stressing just yet, because not only can you remove the risks and effects of being without an income, it is also easy to set up income protection insurance through your superannuation with AMP, so that you know your future is looked after from every angle.
Features of AMP Elevate Income Insurance through Superannuation
There are unique benefits and drawbacks to having your income protection insurance policy within your superannuation account, and depending on your situation and your plans for the future, the positives may outweigh the negatives. If they do, your income protection superannuation with AMP will offer you:
- An offset benefit. If you make a successful claim for total or partial disability on your income insurance, AMP will offset the benefit payment by any amount that is paid or payable for disability:
- Under law
- By way of any other disability income, sickness or accident plan
- Under common law
- From any employer paid leave including sick, leave, annual leave or long service leave.
- Total disability amount. If your pre disability income is less than the benefit amount of your total disability insurance, your benefit amount will be reduced so that when your payments are combined, they do not exceed more than 75% of your pre disability income. As required by superannuation law, you cannot receive more than 100% of your pre disability income from all combined sources, and so AMP Insurance may reduce your benefit amount to align with this.
- Cover while unemployed. You are not eligible to make a claim on your income insurance while you are unemployed. However, you can continue to pay your premiums to maintain your insurance plan, so that it is in place when you resume work. This can be very valuable, because if you stop paying your premiums, and your plan ceases, you may not be able to reapply for the same level of cover, at the same premium rate, as your circumstances may change.
- Indexation of benefit. Your benefit amount under your income insurance will increase in line with the Consumer Price Index on the renewal date of your policy each year. This ensures that your benefit keeps up with inflation, and remains relevant to your expenses at the time of your claim. However, as the benefit you receive cannot be more than 100% of your pre disability income, any CPI increases above 10% will be made to your super fund provider, who will then release the benefit at the time of the claim if you have met the appropriate conditions.
- Fees for insurance. When you have AMP Elevate Income Insurance in Superannuation, you pay a premium for your life insurance superannuation plan and the income insurance superannuation plan, plus stamp duty. There are no other fees charged to you for having your insurance within your super fund.
Eligibility for Income Insurance Within Superannuation
To have your income insurance within your super account:
- You must have sufficient super funds in your super fund. The premiums for your income insurance are paid from the money in your super fund, so your AMP Elevate Income Insurance will remain in place as long as you have sufficient funds in your super account.
- Work test. If you are between 65 and 75 you will have to satisfy the work test in order to continue making contributions to your super fund. The work test requires that you have worked at least 40 hours in a period of less than 30 consecutive days. You will not be able to make a claim on your income insurance if you are no longer making superannuation contributions.
- Employer or member supported. You are able to set up your income insurance in superannuation through an employer-supported basis where your employer pays the premiums, or via a member supported system where you pay the premiums.
Differences when your income insurance is within your superannuation
Some things you will need to keep in mind if you choose to take out income protection through your super account include:
- The benefit is paid to your super fund, not to you. If you make a claim on your income insurance and your policy is taken out in conjunction with your superannuation, the benefit payment will be made to the super fund, who will then release the benefit to you. In order to release the benefit you need to satisfy certain conditions of release under superannuation law, and if you don’t need the conditions, the benefit will remain in your super account until you do.
- Tax return reporting. The amount, which is paid to your superannuation fund, must be included in your income tax return each year. The amount will be paid to your fund net of tax.
- Self managed super fund. If your superannuation plan is to be owned by a trustee of a self-managed super fund, you are not able to hold AMP income insurance within your superannuation. If you have a self-managed super fund, you are still able to take out a non-superannuation life insurance or income insurance plan.