Life insurance in superannuation is generally not the most pleasant thing to think about, because you are planning for your death. But if you want your loved ones to be taken care of, then it’s important to get your head around life insurance. Super funds generally come with a range of insurances including life insurance, but what level of cover do they provide, and how do they work?

What are the types of insurance in superannuation?

Each superannuation fund has a slightly different offering when it comes to the life insurance within superannuation that they offer. You can find out through your super provider directly which of these you hold.

  • If you have life cover with your superannuation provider, this means that a lump sum or recurring payment will be made to your beneficiaries after your death.
  • If you have TPD insurance, you will receive a regular payment if you are unable to work because of a permanent illness or disability.
  • If you have income protection insurance, you will receive a regular payment for a fixed period of usually between 2 and 5 years if you are unable to work because of a temporary illness or injury.

You can learn more about TPD and income protection insurance in super or compare super insurance.

Why might I not have insurance within superannuation?

Aside from your super fund offering different insurance products, there are a couple of reasons why you may not be eligible for insurance within superannuation.

If you are under 25 or have a superannuation balance under $6,000, you generally won’t yet be insured unless you work in a dangerous job and your fund has opted to provide you with discretionary cover. If you are under 25 or have a low super balance, you do still have the option of contacting your super provider directly to request it.

If you are a young person who does not currently have private insurance, life insurance in superannuation could be a great way to be insured for less. Premiums through super are cheaper because your super fund is purchasing them in bulk.

On the other side of the scale are older people. If you have life cover through your superannuation, it will end after you turn 70. For TPD insurance, the cut-off age is usually 65.

Another reason you may not be insured through your superannuation is if your account is inactive. If you have not made a superannuation contribution in 16 months, the fund is required by law to cancel your insurance. This could happen if you have an old super fund that you haven’t yet rolled into your current fund, or if you are not currently working. If your insurance is about to be cancelled, your super fund will let you know, and you can opt to keep it by informing them or by contributing a little.

How can I check my level of cover within my superannuation?

Knowing your level of cover through superannuation is important because it is likely to inform the level of insurance you take out with private insurers. You want to avoid paying for the same insurance twice, whilst also feeling comfortable with the level of cover you do have.

There are a few ways you can access this information and the first of which is to call your super fund directly. They should be able to tell you what type of insurance you have and what the level of cover is. Calling and speaking with your fund directly is likely to be your best bet if you are in any of the categories discussed above that might not be automatically covered.

Alternatively, you can access your super fund account online and see the information that way. If you can’t find the information within your account, it will be available through your fund’s annual statement and the PDS.

How do I know which superannuation insurance is right for me?

The level of choice that you have through your super provider for insurance is somewhat limited. The insurance that you are provided does not come directly from your fund, and instead is facilitated through an agreement between the super fund and an insurance company. This means that you are likely not able to switch to a different insurance provider by contacting your fund directly.

You are, however, able to choose a different insurer, have the premiums deducted from your super fund and cancel your super funds existing insurance. To do this you will need to go through the new insurer directly or through a life insurance advisor or a financial advisor that can give advice on life insurance.

So how much life insurance do I need?

This is a deeply personal question that is determined by several factors. Getting in touch with a life insurance advisor will help you understand the value of insurance for your circumstances, and exactly how much you need.

You can compare super insurance and get a better understanding of your options. Or fill in the ‘speak to an advisor’ contact form on this page and an advisor will be in touch to help you decide what the best option is for you.

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