Superannuation can be confusing at the best of times for the average Australian. However, for those experiencing the effects of dementia or living with those affected by it, access to their superannuation can become a financial issue of great magnitude.
Dementia is not a specific disease but rather a term that describes symptoms associated with more than 100 different diseases characterised by the impairment of brain function. The most common type of dementia often encountered is Alzheimer’s disease.
It occurs more frequently in the elder demographic than in the younger population but is indiscriminate in who it affects. However, with an increasing number of people looking at accessing their superannuation, and a rise in the number of Australians impacted by Alzheimer’s disease or dementia, preparation is of importance.
Insurance In Superannuation And Dementia
When it comes to your superannuation, if your circumstances mark you as an eligible applicant, you may be able to claim a lump sum from your superannuation’s fund’s total and permanent disability (TPD) insurance.
You may be under the assumption that to access the benefits from TPD, you need to have suffered an accident, a workplace injury, or a critical terminal illness. However, you can claim TPD and monthly income protection benefits from your super fund if you have any long-term condition that affects your ability to do your job (including young-onset Alzheimer’s or dementia).
You could be eligible for total and permanent disablement from your life insurance provider for a broad range of early-onset Alzheimer’s disease or dementia-related symptoms, including significant permanent impairment, loss of independence, cognitive decline, and other mental health effects.
Your life insurance provider will consider several factors when deciding whether you’re eligible to make a claim, including:
- If a doctor or medical specialist can support your claim.
- Whether you’re receiving any treatment for dementia or Alzheimer’s disease, and the frequency of this treatment.
- The level of permanency of your early-onset Alzheimer’s disease.
- How your symptoms have impaired your capacity to work as your condition progresses.
- Whether you may take on an adjusted job role or work in a new career.
You should become eligible for early access if you successfully claim TPD insurance for early-onset Alzheimer’s or dementia. This money will be paid in a lump sum and will cover your day-to-day costs. The amount of money you receive will depend on your specific circumstances.
What About If An SMSF Trustee Is Affected By Dementia/Alzheimer’s?
In the case of an SMSF, legally, the loss of mental capacity for a trustee of an SMSF means that they can no longer make decisions as a trustee of the fund. The critical period for an SMSF is the time before diagnosis. The trustee may be making or not making decisions that would be in the best interest of the fund members.
There are four options that the trustees of this SMSF have:
- They can retain the SMSF and appoint additional trustees to the fund who share trustee responsibility as they age. The addition usually happens with adult children joining the fund.
- The SMSF appoint an individual to take on trustee responsibility on his behalf under an enduring power of attorney.
- The trustees of the SMSF can close the SMSF and roll over the fund to a public offer fund. All ongoing administration and compliance of the fund reverting to a third-party trustee.
- The SMSF trustee can convert the fund into a Small APRA Fund (SAF). A SAF offers the flexibility of an SMSF without trustee responsibilities. An independent trustee is appointed to manage the responsibilities on an individual fund and an agreed fee basis.
It is too late if you have not appointed someone as your enduring power of attorney and lose mental capacity. After this time, you will need to apply to the court. It is always essential to seek advice about appointing someone as your enduring power of attorney.
