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Published: 17 February 2012
Author: Tanya Neilson

Super benefits can be unlocked early

It's not that well known that superannuation can be unlocked early if you are injured or ill and, as a result, unable to work.

If you meet the relevant criteria, all Superannuation schemes will release early any funds accumulated. What's more, many Super funds offer disability insurance and income protection for up to 24 months, even though you may be unaware of the benefit.

One of the major benefits of a Super claim is that, unlike TAC or WorkCover claims it does not matter how or where you were injured. It only matters whether or not you can work.

How does it work?

There are several claims you may be able to pursue:-

Permanent incapacity (to return to work)

If, as a result of illness or injury, you are no longer able to work and this is likely to be permanent, you can have the fund unlock your account balance. This amount includes your own contributions plus those of your employer.

If your claim is approved, you can start to use the funds immediately. In terms of taxation, which is a major drawcard of Superannuation generally, you can withdraw your benefit and have it taxed at a concessional rate, while part of your disability benefit is usually tax free.

Total and permanent disability (including death)

In addition to any funds currently locked away in your fund, you may also be entitled to an insurance payout on the grounds of disability. Again, many workers are simply unaware of the 'built-in" benefits of some Super funds, and a common one is disability insurance. This means that you have a small premium taken out of your Super contributions to pay an insurance premium that provides you with disability insurance cover.

A successful Total and Permanent Disability claim will mean you receive your Super account balance plus the extra amount for you which you are insured.

What's more, the insurance extras often include payment of lump sum death benefits to a family member. So if a member of your family passes away, you should find out from their Super fund whether you can claim a Death Benefit.

Many people of course never look into the fine print of their Superannuation, so it should come as no surprise that they also have little idea of the insurance provisions.

How do you check on cover?

Super funds differ in their approach. Not all funds offer insurance. But if you are like many people who have paid into various Super funds over the course of your working life, it is possible that at least one of these includes insurance extras.

You should search for Superannuation funds to which you have contributed but since forgotten about using the SuperSeeker tool on the Australian Taxation Office website.

In the event that your Super statements do not reveal any insurance benefit, you may still be covered. What matters is whether you were insured when you were injured or last worked. If in doubt, a good solicitor will be able to help you confirm your eligibility for a benefit.

Regardless of eligibility for insurance benefits, you can still apply to withdraw your Superannuation balance if you are unable to work.