What kind of insurance is available through super?

The three types of insurance that are commonly provided through super include:

  • Death cover (including terminal illness) – pays a lump sum to your beneficiaries if you die or suffer a terminal illness.
  • Total and permanent disability (TPD) – pays a lump sum if you suffer an illness or injury that means you are unlikely to ever work again.
  • Income protection (IP) – pays a monthly income while you are unable to work due to illness or injury. It is paid for a maximum time period (eg. 2 years known as the benefit period), which can be changed to suit your requirements

Death and TPD cover are available as either a fixed-dollar amount or in units. Income protection (IP) is only available in units.

You can choose your own mix of cover however your TPD cannot be more than your Death cover and you cannot hold TPD cover without Death cover.

Why should I get life insurance through super?

Having your life insurance provided through super is generally a cost-effective way to provide security for your finances and family. Here are the benefits:

  • Cost – because funds purchase insurance in bulk, it’s often significantly cheaper than purchasing an individual policy for you
  • Tax benefits – because premiums are paid from your super – which is usually taxed at a lower rate than your after-tax income – you save even more money
  • Simple management – Premiums are paid automatically by your fund and, in many cases, your fund can help you in the event you need to make a claim
  • Automatic acceptance – Members who are enrolled by their employer generally do not require a health check
  • Scalable – You can increase or decrease the amount of cover based on your needs.

Things to be aware of

For most people, the life insurance provided through super is an excellent option. There are, however, some things you should know:

  • The level of cover and type of benefits may be limited
  • If you change funds or stop contributing, your coverage may be cancelled
  • Tax may be payable on some benefits; other tax rules apply if you select a beneficiary who isn’t a dependent.
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