Redundancy and Insurance


Many Australians have insurance cover provided by their employer under a “group insurance” or superannuation arrangement. Terminating employment, either voluntarily or as a result of redundancy can have serious implications in relation the insurance cover provided by an employer or through existing superannuation arrangement.

Insurance cover may take a number of forms:

Death – this is a basic type insurance cover that provides for the payment of a benefit, the sum insured, in the
event the person insured dies. Some policies may extend their cover and actually pay out a benefit where the life insured has been diagnosed as being terminally ill and is not expected to survive for a specified period (usually 6 or 12 months)

Total and permanent disablement – is an extension of the traditional “death only” cover. TPD benefits, as they are referred, are payable in circumstances where the life insured becomes totally and permanently disabled and is unable every again to work in either their own occupation, or any occupation, depending on the specific conditions attaching to the policy issued.

Income protection (salary continuance) – this type of policy pays a regular benefit designed to replace salary and wages which may stop as a result of a temporary or a permanent disablement.

Ceasing employment or changing superannuation funds may cause valuable insurance protection to be lost.

One of the first things we should consider when ceasing employment is a review of our current insurance arrangements. This should be undertaken by a qualified insurance adviser.

Many group style insurance arrangements include a “continuation option”. Provided application is made within a specified time (generally 30 days, but may vary between insurers), group insurance cover can often be replaced by an individual policy with the same insurer, without the need to meet any medical requirements. If our health has deteriorated since the insurance was originally taken out under the group arrangement, guaranteed replacement with personal cover can of significant benefit.

When ceasing employment, for whatever reason, an appointment with a qualified insurance adviser (sometimes referred to as a risk adviser or risk specialist) should be high on your priority list. If you require any further information or assistance, please contact Christian , on 07 32083 888. Christian is an Authorised Representative of Professional Investment Services and he and his team will be able to provide you with advice relating to your current and future needs.


Source: Peter Kelly – Professional Investment Services.

Copyright 2014. My Tax Zone.