News Hub Superannuation

Take cover – and stay protected during parental leave

Superannuation

28 October 2018 5 min read

One of the great features of a good super fund is the added insurance benefits available to eligible members. But what happens to these if you take time out to have a baby? QSuper’s insurance team explains.

Insurance is one of those things you have but hope you never need to use. In your life, you may take out insurance policies for your health, your home and contents, your businesses, your cars and boats and even your pets.

Then there is life insurance.

For QSuper Accumulation accounts, QSuper offers death cover, total & permanent disability (TPD) cover and income protection cover.¹ Glen Quinn, a member of the QSuper insurance product team, answers the most common questions parents or prospective parents ask.

If I have insurance cover with QSuper, am I still covered when I take parental leave?

Death cover and TPD cover are not affected simply by taking parental leave. If you hold Income protection, the cover might be affected, as follows.

Paid leave: When you take either annual, long service or employer-funded parental leave, you will continue to be paid and receive your superannuation guarantee contributions. During this time, your insurance is unchanged and all premiums are deducted as usual.

Leave without pay: Once you have exhausted all your employer-funded paid leave, you can choose to return to work or take leave without pay. This second option can be a grey area for a lot of people if they hold Income Protection insurance. If you have a salary-based Income Protection policy and three months pass with no employer superannuation contributions, you will be automatically switched to what we call a unitised policy. What that means is, we can see there’s no money going into the account so we base your cover on your most recent salary.

If you go on leave without pay, your ability to claim an income protection benefit will continue, provided:

Your leave without pay does not exceed 12 months
You have a documented return to work date
You have enough in your Accumulation account balance to deduct premiums from.

What happens if I’m on the federal government’s Paid Parental Leave Scheme?

This is classified as unpaid leave as employers aren’t required to make superannuation contributions.

I’ve extended my parental leave beyond 12 months, what does this mean for my insurance?

Income Protection insurance is designed to protect income, so if you are on extended leave without pay there is no income to protect. Rest assured that when you return to work, you can apply to return to default cover if you hold income protection insurance.

If you prefer to ensure that your Income Protection continues while you’re on leave, you can choose to either:

Permanently opt in to cover; or
Make a voluntary contribution

What happens to my Death and TPD cover while I’m on parental leave?

They’re definitely still in play and premiums will be deducted as usual because you can still make a claim on them at any time. There are some different conditions you need to meet if claiming for TPD that cover home duties as opposed to a workplace.

In that case, is it worth continuing my Income Protection cover during parental leave?

You should certainly consider it if you take leave without pay for 12 months or less. QSuper’s Insurance Needs Calculator is a useful resource to help you determine what cover you need.

What happens if I need to make an insurance claim while I’m on parental leave?

Claims for TPD benefits are not affected and can be made at any time, provided premiums are up to date. If a successful Income Protection claim is made during parental leave, the benefit won’t start until the date you are due to return to work. The reason for this is that you have chosen to take leave without pay and Income Protection exists to pay a benefit because you can’t work as scheduled. This is one reason why it’s important to document a return date with your employer before you take leave.

You can check the insurance cover you currently hold with QSuper via Member Online.