Financial help for illness and injury

If you’re reading this, it probably means that you, or somebody close to you, is going through a hard time.  The purpose of this article is to give you some ideas that might alleviate the financial pressures.

Illness can come suddenly, and can turn the life of a family on its head.  It could be a long-term chronic condition, or it could be a sudden acute sickness.  My family has lived though both, in recent years.

The impacts can be significant, and the financial impact cannot be estimated.

You might have lost your income due to your own health situation, or you might have had to cut your income to allow you to care for a partner, a parent, a child or close relative.  This adds to the stress of an already difficult situation.

So what are your options in terms of getting outside assistance?

I’m going to mention three main ones:

• Insurance (including insurance held in superannuation);
• Early access to super; and
• Centrelink

Insurance (including insurance in super)

If you have insurance policies that a financial adviser set up, you should contact your adviser for help.  They are best placed to help you.

If you hold insurance personally, without an adviser attached to the policy, call the insurance company to discuss what to do next.

You might also have policies within your super fund. Almost all superannuation funds offer insurance and, in my experience, a lot of super members don’t even realise they have insurance.

There are three types of insurance you can hold in super:

• Life insurance, which pays out not just in the event of death but also in the event of a terminal illness.
• Total and permanent disability insurance (TPD), which covers a situation where doctors have determined you can never work again.
• Income protection insurance (also called “salary continuance insurance”)

For further general information about claiming on life and TPD insurance check out the government’s Moneysmart website.

Hopefully if you’re reading this your situation isn’t terminal or permanent.  If so, you might still have insurance cover in your super that would help: income protection.

The government’s Moneysmart website explains income protection insurance as follows:

Pays part of your lost income if you can’t work because of illness or injury. Most policies offer cover based on your annual earnings in the 12 months prior to your illness or injury. Most income protection policies offer two or five years, or up to a specific age (such as 65).

Find out more about income protection insurance.

 Typically, policies issues in the last few years only offer two years of payments, and you have to wait 30, 60 or 90 days to claim income protection insurance payments.  Your monthly payment will usually be a fixed amount agreed with the insurer (via the super fund).  If you are still able to work part-time or are receiving Centrelink the insurance benefit will normally be reduced.

To find out if you have cover and how to claim, call your superannuation fund.

If you have a financial adviser linked to your super fund, make an appointment to discuss your options.

Warning: there are law firms who offer to help you claim a superannuation benefit.  I’m suggesting get a lawyer involved is never helpful.  But before engaging one of these firms, find out what you’re eligible to claim directly from the fund.  If you decide to use a lawyer, ask them whether they can provide you with a higher benefit that the fund has offered.  Get the answer in writing.  Don’t agree to a fee unless the lawyer says that they can provide you a greater benefit that you are offered.  Otherwise, you might just be paying a large part of your benefit for somebody to fill out an application form.

Early access to your superannuation balance

In addition to any insurance benefit you might able to get from your super fund, there are a few ways to gain early access to some of your super.  But it’s very strict and limited.

The Moneysmart website covers four reasons:

In some circumstances, you can access your super before you reach your preservation age:

• Incapacity — if you’re unable to work or need to work fewer hours because of a medical condition.
• Severe financial hardship — if you can’t meet your living expenses and have been receiving Commonwealth benefits for 26 weeks.
• Compassionate grounds — to pay for unpaid expenses. These could include medical treatment, modifying your home or vehicle because of a severe disability, funeral expenses, or a loan repayment to prevent you losing your home.
• Terminal medical condition — if you have a terminal illness or injury.

The ATO website covers these in more detail.

Compassionate grounds

The ATO website details when funds can be released on compassionate grounds.  Importantly, you cannot claim on super to get reimbursement for an expense you’ve paid.  According to the ATO, it needs to be an unpaid expense, and you cannot have the savings to cover the expense (including having assets to sell).

It doesn’t mean you have to sell your house to cover expenses.  I’ve had a few clients receive these payments to cover IVF treatment, for example, and the recipient has been a homeowner at the time.

As well as paying out to cover unpaid medical expenses, compassionate release can apply if you are threatened with foreclosure by a bank or local council.

Severe hardship

The severe hardship payment can be between $1,000 and $10,000, and can be only be claimed once per year.

Centrelink

Many people are reluctant to look at Centrelink for help, and I understand there is a certain pride in being a self-sufficient family.  And the system is notoriously difficult to deal with.  However, there is help available, and it’s worth the effort to apply.

If you are unable to work due to your own illness or injury, you should look into the JobSeeker payment.  In the past, there were two separate payments: Newstart (looking for work) and Sickness Allowance (unable to work due to illness).

The are now combined into the JobSeeker payment.  You will need to have medical evidence to support your claim.

If you are unable to work due because you are caring for a loved one, you may be eligible for Carer’s payment, which applies “if you give constant care to someone who has a severe disability, illness, or an adult who is frail aged.”

Eligibility is based on medical assessments, which can be intrusive, and it depends on the doctors “assessment score” of the person you are providing care for.

If you cannot get this payment, you might be able to get a Carer’s Allowance.  This payment isn’t as much as the Carer’s payment, but at the same time, the medical rules are not as strict.  Your and your partner’s income cannot exceed $250,000.

Other options

Here are some other options that might help:

• If you don’t qualify for any Centrelink payments, you can apply for a Low Income Health Care Card which won’t provide any payments, but will give you discounts on certain bills such as car rego, council rates and power bills.
• If you are struggling to pay your mortgage, call your bank and ask them what they can do to assist you. According to Moneysmart, “All lenders have hardship teams ready to help customers in tough times.”
• Seek help from a financial counsellor. Financial counselling is a free service, and it is different from financial planning, which is where you seek paid advice from a professional.
• If the injury was work related, you might be able to get assistance via Worksafe
• If the injury resulted from a car accident, you might be able to get assistance from TAC

I hope this has been helpful to you in a difficult time.