The super mistake that nearly cost me thousands: how I fixed it
"Do you wanna know something I just found out about my super?"
There are many things my sister and I chat about. Netflix, books, when we're next hitting up our local sushi train, the usual.
But when she recently mentioned something to do with her super, safe to say my ears perked up.
She told me that her super fund had her listed as a blue collar worker — she works in marketing.
"You should check yours too," she persisted.
So I did.
And I was listed as a blue collar worker as well.
While the image of the both of us on a construction site looking like Fifth Harmony in that one music video is hilarious, this mix-up is incredibly common (and potentially costly).
Here's what happened
Unless you've opted out of it, life insurance is automatically added to your super if you're over 25 and have more than $6,000 in your account.
For a lot of us, it's something we barely think about.
However, the premium we pay is based on our risk profile and is split into 3 categories:
- Standard. A worker with light manual details, like a retail worker.
- Blue collar. A worker who uses heavy and dangerous machinery and performs strenuous tasks on a daily basis, like a construction worker.
- White collar. A worker who spends 80% of their day doing administrative or office-based tasks, like pretty much everyone in the Finder office.
Most super funds tend to put Australians in the 'blue collar' category because it's the most expensive to insure. The problem is, people like my sister and I end up paying more than we need to in premiums.
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How I fixed it
The process of changing my occupation was incredibly simple. I jumped into my super app, answered a couple of questions about my job and submitted my request.
My super fund got back to me shortly after and approved it.
When you change your occupation to a white collar worker, it's likely your premiums will drop due to the lower risk.
Do you need to have life insurance through your super?
No. While there are benefits to having life insurance through super, it's not mandatory.
Life insurance through super is generally cheaper than having a standard policy, however the premiums you pay eat into your retirement balance.
It's also not as flexible as a life insurance policy you'd take out for yourself and coverage usually ends once you're over 65.
So if it's been a while since you last had a squiz at your super account, take this as your sign to do so.
And while you're at it, why not compare life insurance policies to see what kind of coverage you could be getting with a standard policy.
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