Useful terms explained
Having the right insurance is important to help make sure you are financially supported if you were to stop working from either an illness or injury, or to die. Just like you take out insurance to protect your home and car, it’s important to consider whether to have insurance for your most valuable asset - cover your life and income.
The main insurance types of cover to know about and consider:
Death cover
Pays a benefit to your dependants, estate, or legal beneficiaries if you die.
Advantages - Helps to ease financial stress on your loved ones by paying money in a lump sum should the unexpected happen to you.
Total & Permanent Disability (TPD)
Pays a benefit if you’re unable to ever work again due to injury or illness.
Advantages - Helps by paying money in a lump sum which you can use to cover the costs of care, rehabilitation, loan repayments and future costs involved with day-to-day living expenses.
Terminal Illness
Pays you an advancement if you’re medically certified as likely to die within 24 months—applies if you have either life cover or TPD.
Advantages - Helps to ease some of the financial stress on your loved ones by providing money in a lump sum which you can use to help with medical treatment and future support for your family.
Income Protection (IP)
Pays a replacement income, typically a percentage of your income, if you’re temporarily unable to work due to illness or injury. You can generally only claim on one IP policy so you should check if you have other IP cover elsewhere.
Advantages - Helps if you become injured or ill (inside or outside of work) and can’t work temporarily. It provides temporary payments to assist you to meet your day-to-day living expenses while you’re not earning an income.
Super Contributions Benefit
Pays your super contribution amounts while you’re receiving an Income Protection claim up to 15% of your monthly income.
Advantages - Helps by making contributions usually paid by your employer to make sure your super grows when you’re not working.
For more information about these contact us or contact your financial adviser.
Here are some useful terms commonly used
Benefit payment period - the maximum amount of time that a benefit may be paid for.
Inactive account - super account that hasn’t received a contribution or a rollover for 16 consecutive months.
Eligibility requirements - to be eligible for insurance cover, you must be employed in an Insurable Occupation, be an Australian Resident, and meet all other eligibility requirements as set out in the insurance policy. Eligibility requirements, the types of insurance available, conditions and level of your insurance cover will be specific to the super product you have, and are set out in the relevant Insurance Guide which forms part of the Product Disclosure Statement.
Life events - significant life events that happen such as- completing university, getting married or divorced, having or adopting a child and taking out a mortgage. You may need to review your insurance when a life event happens to you to make sure your life insurance cover, and the amount of insurance cover, meets your changing financial protection needs. See the relevant Insurance Guide which forms part of the Product Disclosure Statement (PDS) to learn more.
Beneficiaries - if you die, your super can be paid directly to certain eligible dependents or your legal personal representative. You can nominate who it will be paid to by completing a non-lapsing binding, non-binding nomination or (available on MLC MasterKey Pension Fundamentals only) a reversionary nomination. You can access the form and more information at Forms & Documents.
Occupational Ratings Classification - the rating that applies to your occupation, which is determined not by job title but by the duties that you carry out. It’s important to make sure your occupational ratings classification is correct (particularly if you change jobs or roles) because it could impact your insurance and the premiums you pay. An incorrect occupational ratings classification or employment status may impact your eligibility for insurance cover. It could also mean that you’re paying incorrect premiums for your insurance cover – particularly if your occupation is classified as Special Risk or Not Insurable. If you change the work you’re doing, you should also make sure your occupation rating is up to date – it’s your responsibility. Visit mlc.com.au/occupation or call us to check your details are correct.
Premiums - the cost of insurance paid typically on a regular basis to pay for insurance cover.
Underwriting is an assessment by the insurer based on individual personal, employment and health information. The amount and type of insurance cover that the insurer is prepared to offer, and the cost of the insurance is based on the level of risk to insure you. Once you have been through the underwriting process, the insurer will be able to decide whether to provide you with insurance cover, what type, and how much it will cost.
Waiting period - the minimum period you must wait before you start receiving your Income Protection benefit payment, for example 30, 60 or days 90 days.
This term below is only applicable for MasterKey Super Fundamentals
Not Insurable - when the insurer determines that a member's individual circumstances mean the risk of providing insurance cover for them is too high, mainly due to employment or health reasons and so insurance cover is unable to be provided. If you move from an insurable to a not insurable occupation rating classification, you’ll generally only keep your Death & Total Permanent Disablement insurance cover, and you may lose any Income Protection cover you have. If your occupation rating falls into a not insurable category, any claim you make will be declined even if you’ve paid premiums. See also "underwriting".
Connect with us
