Why you should get financial advice before consolidating your super
According to ASFA (Association of Superannuation Funds Australia), there are more than 14 million Australians holding superannuation accounts, with an average of just over two accounts per person. We all know that in most cases, it is not beneficial to have more than one super account and we may be paying double the fees. Fortunately, the process of consolidating these super accounts has never been easier.
Superannuation providers are making it easier and easier to consolidate all your accounts into their account because they know that the more of your superannuation funds they have under management, the more money they are likely to make. However, before you go ahead and tick that box that says ‘yes, please consolidate my super’, there are some things you need to know.
Now I know insurance is never a popular topic but believe me, when it comes time to make a claim, people are VERY interested in what insurance they hold and if they don’t hold the right insurance, why not.
If you consolidate your superannuation into one account, you may lose the value of the insurance you hold in your other account. Insurance is a complex beast and the insurance you hold in one account is unlikely to be the same as one you hold in your other account.
Let me give you an example. Andrew has two superannuation accounts. Both have $400,000 of Death and TPD Insurance and Andrew decides to roll both super balances into the one account. What Andrew doesn’t know is the super provider he is rolling out of has no ‘pre-existing exclusions’ whereas the new super provider does. Andrew hurts his back (which he has had troubles with in the past) and tries to make a claim on his insurance and is denied. Now if Andrew had rolled into his original account or into another super provider which didn’t have a ‘pre-existing exclusion’ he wouldn’t have these problems.
Before you consolidate your super, look at all aspects involved which include the fees, the investment options and the insurance on offer. We know this is complex and this is why we do what we do.
At Bounce Financial, we help people find the right superannuation provider, with the right investments and the right level of insurance with appropriate insurance terms. Our first meeting is always free and if our advice relates solely to your superannuation and insurance, you can usually pay any advice fees out of your super balance.
What about you? How many superannuation accounts do you have? Is 2015 the year you take charge of your superannuation?
This post is from Ben Brett. Check out our details in the About Us page.