The fact you’re 18 years old and already thinking about Super and Insurance gets you 5 gold stars from me.

When I was 18 years old I thought I was ‘financially clever’ because I was good at saving and not buying loads of things. I was not and, like many, wish I had a time machine to go back to that Jess and whisper into her ear ‘learn how to invest, like right now’... I thought investing was scary and that Super was only important when you were an old person – luckily, I got advice in my early 20’s and it helped me financially supercharge my life.

It annoys me to no end that when you’re young you often don’t get insurances automatically added to your Super account. This was done in a quest to not have your balance eroded by premiums (fair)... BUT, your risk of an accident is high (anecdotally, young men tended to have a high claim rate for accidents when I worked in an insurance company), plus you have a lot of working career ahead of you, so you’re ability to earn an income is very important. If something meant you couldn’t, your financial goals would probably get thrown swifty out the window.

You may not have a strong need for life insurance, if you don’t have debts or dependents, but I would say most (if not all!) working age people need to ensure their income is protected and also consider insurances like Total & Permanent Disability (TPD) and Trauma cover.

If you’re under 25 years old, you have a balance of less than $6k or you haven’t contributed to your Super in 13months (and haven’t opted in) you will likely find you have no insurance, or your insurance has been cancelled.

I always recommend reading the fine print... Boring? You bet. Important? Hells yes! The last thing you want is to think you’re covered only to find out after something happens that there is an exclusion or clauses, meaning you won’t get paid a claim. If you want the best chance of getting a claim paid, get an Insurance Specialist to set up retail insurance cover for you. They will find the best cover for your needs and help you make sure you’re getting the best deal.

Generally, they get paid from the insurer direct (like a Mortgage Broker does). You can fund things like Income Protection and TPD through most Super funds, either partially or fully (if it’s fully there are normally less conditions you can claim on), but IP is usually tax-deductible, so most people tend to want the most amount of features and to claim it back on tax. If you do opt for holding and paying it fully inside Super, you should consider if salary sacrificing the premiums works for you – this was you can be confident it’s not impacting your overall balance amount.

If you’re a member with us, review our Little Black Book for our trusted recommendations on who to reach out to.

Let’s talk about your Super...If you change the underlying investment option you’re in (from balanced to high growth), or you move to another fund completely there are some things to know. You will incur CGT on any gains, although how CGT is calculated inside Super. You also may have a different fee structure.

Ultimately, whilst you shouldn't be swapping and changing your Super all the time (nor chasing last year's top performing fund), but if you realise that your asset allocation isn’t correct, that the fees are too high or the average long term net performance is lower than similar funds (remembering you need to actually look at the break up of what it’s invested in, because labels on super funds can be wildly misleading!), then it is probably time to look for a better option or fund to suit your needs.

Good luck and I know everyone older who is reading this is proud of you for getting onto it now (and probably wishing they did to!).

Jess

PS. Would you please be so kind to let everyone of your friends know you are doing this? You have no idea how many young people are not thinking about this yet, and you could not only help them change their life, but also help in making talking about money a non-taboo topic for the next generation.

Have a money dilemma?

Money dilemmas can be a nightmare! They can leave you up all night ruminating about what to do, have you feeling alone and isolated or just plain ol' stuck. So, we are here to help. I am going to tackle one a week and give you my unbiased, no BS general thoughts on how to tackle your conundrum. We would love for you to send yours (or someone you know) in. 

Obvs all of this is general advice only... especially important to note any and all of the comments above do not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs.