Ensure you’re correctly insured

Just one in three Australians know how much they are paying for life insurance in their super fund. reports

MANY Australians have no idea how much money they are paying for life insurance in their super fund, sparking calls urging people to check it’s not unnecessarily eating into their life savings.

Concerning new research has revealed seven out of 10 Australians are in the dark about their insurance costs, revealing a dangerous disconnect between super fund members and their life insurance.

The MetLife analysis found almost half of parents of children aged under 18 believe they don’t have cover, and 60 per cent of people say they TEACHING children financial literacy is becoming increasingly important in a world of invisible money, easy credit, and the ability to buy almost anything with a quick tap on a smartphone.

Professionals say parents and grandparents should not rely on schools to teach good money habits.

Here are three vital financial lessons every child should learn.

SAVE BEFORE SPENDING High Financial Solutions wouldn’t have life insurance if it wasn’t automatically included in their super.

As well as increasing the financial risk of not having death, disability and income protection insurance, this lack of focus threatens to cost fund members more money.

After premiums surged a few years ago, they have generally stabilised and some fund members are now in line for cuts.

MetLife Australia CEO Deanne Stewart said it was a good idea for super fund members to check their insurance cover at least once a year, or when personal director Marissa Schulze said the most important thing anyone could teach children was to save part of their pocket money or other income.

“I think that when kids are living at home and don’t have many expenses they should be saving about 70 per cent of what they earn,” she said.

Savings should always aim to be at least 20 per cent, Ms Schulze said.

UNDERSTAND VALUE BEFORE COST

Children should be taught when shopping how much cheaper it circumstances changed such as getting married or having a baby.

She said one reason for people’s lack of knowledge about their premiums was that because insurance premiums were paid inside super they were not hitting people’s hip pockets.

“Sometimes it goes below the radar,” Ms Stewart said. “As humans we often focus on what’s urgent, not what’s important.”

The fact that many parents were in the dark was “definitely a worry” as insurance cover for them was vital, and often should be higher than the basic could be to buy items in bulk or discounted. “Look for things that are on special,” Ms Schulze said, adding that learning patience and waiting for discounts was a powerful lesson .

Wotherspoon Wealth director Simon Wotherspoon said the value of pocket money was taught when linked to effort. “You may wish to assign a price per chore within an overall limit,” he said.

WHERE MONEY COMES FROM Many children rarely see cash, their parents tap cards at terminals, even cards for school lunches. cover provided by most super funds, she said.

Ms Stewart said it could take just five minutes to regain control. “Check what cover you actually have, and calculate what’s right. Most super funds these days have simple calculators on their websites.” A phone call to your super fund could complete the fix.

Some super savers will pay less for their insurance soon after the nation’s largest super fund, AustralianSuper, last month announced it was cutting its premiums by 14 per cent for death cover, 6 per cent for total and permanent disability cover and 20 per cent

“Kids can think it’s a magic card you wave in front of a machine and buy anything you want,” Ms Schulze said. “They still need to understand it needs to be paid for with the money you have.”

Often any money that children do see pops out of an ATM.

Katie Costa teaches her children based on their personalities and ages, and starts paying pocket money at age five using $1 per year of age as a rule.

Youngest son Drew, 3, doesn’t receive pocket money but has a money box. Penelope, 5, receives her for income protection insurance.

The cuts start in May, and industry sources believe other funds will try to follow.

AustralianSuper’s group executive of membership, Rose Kerlin, said the fund used its size and scale to negotiate more affordable bulk rates for its members.

She said people should check they were not paying too much for insurance, and that they were not paying for insurance they might not need.

“It is important to weigh up the benefits of insurance against the cost,” Ms Kerlin said. ADDS UP: Katie Costa, with Hugo and Penelope, is making sure her children know money doesn’t grow on trees. pocket money in cash while Hugo, 7, is learning about the invisibility of modern money and his income and spending is tallied on a whiteboard.

“They have jobs to do to get their money. It’s making sure they’re aware that money doesn’t grow on trees,” Mrs Costa said.

Mr Wotherspoon said children would tune into money messages when it was discussed at the dinner table. “Often, young grandchildren are given a small parcel of shares while they’re young and they see how their value grows over 10 years or more,” he said.