Life insurance through superannuation
Did you know that your employer’s default fund must offer a minimum level of Life Insurance? There are benefits to having insurance cover in super but it’s important to be aware of the detail. We look at how super funds typically have three types of insurance for members, the sort of conditions, to expect and what this means to you.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 18 Jul 14
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Did you know that your employer’s default fund must offer a minimum level of Life Insurance? There are benefits to having insurance cover in super but it’s important to be aware of the detail. We look at how super funds typically have three types of insurance for members, the sort of conditions, to expect and what this means to you.
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
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Duration 03:16
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Your employer’s default fund must offer a minimum level of life insurance, depending on your age. Super funds typically have three types of insurance for members: death cover (also known as life insurance); Total and permanent disability, or TPD cover; and income protection cover.
There are certainly benefits to having insurance cover in super. Because the super funds arrange some of the largest group insurance contracts in the world, the cover provided can be very cheap – especially given the fact that it’s being bought with pre-tax dollars.
Even if you can’t afford insurance, you know that you and your family have some cover. Some funds automatically accept you for cover without requiring a health check. And it’s
It’s easy to manage because premiums are automatically deducted
However, you also need to be aware that the types of insurance available are limited, and the level of cover may be limited. It’s meant to be one-size-fits-all insurance. So, before organising additional or new life insurance, you need to check what insurance you have through your superannuation and what your super fund could offer.
To work out whether your super insurance cover suits you, you need to read the policy conditions carefully and understand which pre-existing medical conditions are not covered. Your Super Fund Trustee will give you these conditions. Don’t be afraid to ask as many questions as you need to.
Don’t think you can forget about insurance just because it comes through your super. If you move to a different super fund or your employer’s super contributions stop, your cover may end without you noticing. Also, if you have more than one super fund, you may be paying for insurance in each fund, which may be an unnecessary cost.
Another potential problem is that you do not make a binding beneficiary nomination, or your fund does not offer binding nominations, the super trustee will decide who gets your benefits when you die. Usually benefits are paid to dependents, after taking your wishes into consideration. As always, it’s best to check, and get professional advice where appropriate.