Insurance through your Super

Although insurance can be chosen separately, you may choose to get insurance through your superannuation. This usually comes with a lower premium, which is deducted from your super balance.

 

Life insurance offered in super

The main three types offered are:

• Life Cover pays either a lump sum or income stream to your beneficiaries when you pass away or have a terminal illness.
• TPD (total and permanent disability) Insurance offers a benefit in the case you become severely disabled to the extent you might not be able to work again.
• Income Protection Insurance provides a regular income for a specific period, if you are unable to work due to temporary disability or illness.

Many super funds provide some of these insurances automatically!

 

Inactivity

Legally, inactive super accounts will have their insurance cancelled if it hasn’t received contributions for 16 months. Additionally, super funds may have their own rules to cancel insurance if balances are too low.

In order to keep the insurance, contact your super, or contribute to the account.

 

Advantages to having an insurance through super

• Cheaper – Since the super fund buys policies in bulk, it tends to cost less for you.
• Convenience – premiums are deducted from your super account automatically.
• Health Checks – it’s usually easier to get super fund insurance without requiring health checks.
• Lower Tax – super contributions from your employer are taxed at 15%, which is lower than the marginal tax rate.

 

Disadvantages include…

• Lower Cover – The cover you can get is usually lower than super funds outside.
• Cover Could End – If you change your super, or stop contributions, the cover might end, leaving you without insurance.
• Lower Super – Money is deducted from your super instead, leaving you with less savings in the future.

For further information, check out moneysmart.gov.au.

All information was sourced from moneysmart.