A financial safety net through your superannuation

Moneysmart
(ASIC)

More than 70% of Australians that have life insurance hold it through super. Most super funds offer life, total and permanent disability (TPD) and income protection insurance for their members.

When reviewing your insurance, check if you’re covered through your super fund. Compare it with what’s available outside super to find the right policy for you.

Types of life insurance in super

Super funds typically offer three types of life insurance for their members:

  • life cover — also called death cover. This pays a lump sum or income stream to your beneficiaries when you die or if you have a terminal illness.
  • TPD insurance — pays you a benefit if you become seriously disabled and are unlikely to work again.
  • income protection insurance — also called salary continuance cover. This pays you a regular income for a specified period (this could be for 2 years, 5 years or up to a certain age) if you can’t work due to temporary disability or illness.

Most super funds will automatically provide you with life cover and TPD insurance. Some will also automatically provide income protection insurance. This insurance is for a specified amount and is generally available without medical checks.

Cancellation of insurance on inactive and low balance super accounts

Under the law, super funds will cancel insurance on inactive super accounts that haven’t received contributions for at least 16 months. In addition, super funds may have their own rules that require the cancellation of insurance on super accounts where balances are too low.

Your super fund will contact you if your insurance is about to end.

If you want to keep your insurance, you’ll need to tell your super fund or contribute to that super account.

You may want to keep your insurance if you:

  • don’t have insurance through another super fund or insurer
  • have a particular need for it, for example, you have children or dependants, or work in a high-risk job

Insurance for people under 25

Insurance will not be provided if you’re a new super fund member aged under 25 unless you:

  • write to your fund to request insurance through your super
  • work in a dangerous job – you can cancel this cover if you don’t want it.

Superannuation and insurance can be complex. If you need help call your super fund or speak to a financial adviser.

Pros and cons of life insurance through super

Pros

  • Cheaper premiums — Premiums are often cheaper as the super fund buys insurance policies in bulk.
  • Easy to pay — insurance premiums are automatically deducted from your super balance.
  • Fewer health checks — Most super funds will accept you for a default level of cover without health checks. This can be useful if you work in a high-risk job or have health conditions that can make it difficult to get insurance outside super. Check the product disclosure statement (PDS) to see the exclusions and treatment of pre-existing conditions.
  • Increased cover — You can usually increase the amount of cover you have above the default level. But you’ll generally have to answer questions about your medical history and do a medical check.
  • Tax-effective payments — Your employer’s super contributions and salary sacr