Canberra’s public servants have often thought that being in a government super scheme meant they had good cover in the event that they were ever unwell and unable to work.
While the cover in the defined benefit schemes (CSS & PSS) does have some gaps, it is a pretty good start. Those who have joined the public service since 1 July 2005 however haven’t been able to join these schemes, they instead have to join the PSS Accumulation Plan (PSSap).
There are a couple of technicalities to the PSSap cover that might make it worth reviewing your cover in more detail:
Income protection insurance is designed to replace your wage for a period that you’re unable to work because you’re ill, or injured. The default PSSap income protection has a waiting period of 90 days, so you need to be off work for 90 days before you can claim a benefit.
There is also a benefit period of 2 years, which means that so long as you remain unable to go back to work because of your illness or injury, the monthly benefit will be paid for up to 2 years.
Unless you are a non-ongoing/contract employee.
This is quite particular to the PSSap, in that if you are on a 1 year contract, your cover isn’t actually for 2 years, it is until the end of your 1 year contract. You may have been planning to have your contract renewed but if you’ve been unwell and unable to work for 6 months you may find yourself with no contract and no income protection benefit.
Other insurers will also usually offer a benefit period of up to age 65, so you can be covered for long-term illnesses, but this isn’t an option currently available with the PSSap.
Cover also ceases when you leave employment with the Australian Government or a PSSap participating employer.
This doesn’t always seem like such a big deal to many people, but what it means is that if you have been paying your insurance premiums for many years, but then decide to change employers or career (even a change to a state or territory government job), you will have to apply for new cover and if you have any pre-existing conditions that have developed they are likely to be excluded from the new cover.
Life and Total & Permanent Disability (TPD) insurance
These covers provide a lump sum if you pass away or are permanently unable to return to work. It’s often used by clients to pay off mortgages and perhaps have some money to help with the cost of raising children if you have a young family.
If you don’t make any choices you will be given the default level of cover, which depends on your age but is no higher than $250,000. The amount of cover you need depends on your personal circumstances but for newer entrants to the public service in particular with a mortgage, there are not many Canberra first home buyers with a mortgage that is anywhere close to $250,000.
So what can you do?
If you’re not sure whether your insurance is enough to cover you and your family, book an appointment with us. We spend our days reading insurance policy documents, and product disclosure statements, so that you don’t have to.
Many insurances can also be paid for through your super, so you can manage your expenses while still having the cover you need.
Give us a call on (02) 6247 1233 or email firstname.lastname@example.org to make a time.
All content regarding the PSSap insurance options is from the Insurance and your PSSap super booklet issued 1 December 2013
(image credit flickr user heathbrandon)