Under changes introduced on 1 July 2015, Australians with a life expectancy of two years or less will now be able to access their superannuation early on hardship grounds. Previously, only those who had 12 months or less to live could get early release of their superannuation.
Slater and Gordon Insurance Lawyer Annemarie Gambera welcomed the changes, but warned superannuants to consider the effect that early access to their superannuation could have on their existing superannuation insurance policies.
“Giving terminally ill patients even earlier access to their superannuation funds makes a lot of sense and is good policy,” Ms Gambera said.
“People with a terminal illness suffer financial hardship because they are typically forced to stop working. Many of them need access to additional funds to pay for their day-to-day expenses – like medical bills and their mortgages. Most superannuation account holders also pay premiums so that they have access through their superannuation to insurance benefits .
“Each insurance policy is different, but often they allow the life insurance benefit to be paid as a terminal illness benefit if someone is diagnosed with a terminal illness and has a life expectancy of less than a year. The terms of insurance policies are not changed by the new regulations.
“These insurance benefits can be worth tens or hundreds of thousands of dollars depending on the fund and may not be available once the super funds are withdrawn and the account shut down,” she said.
Ms Gambera said it was important for people with a terminal illness to clearly understand their entitlements before drawing on their superannuation.
“There may be benefits available through superannuation that will further assist a dying person and their family to secure their financial future.