What is flexi-linking and how does it work?
Policyholders now have the option to combine their life insurance policy within super with other types of cover outside of super such as TPD and/or Trauma. This feature is known as flexi-linking.
Just like bundled life insurance policies outside of super, your Life Cover amount will be reduced by the benefit amount of the linked cover outside super when payable in the event of a claim. Should your Life Cover benefit be payable due to death or terminal illness, your linked policies will also end.
An insurance adviser can provide assistance and advice on the best way to structure your linked life insurance policies to best meet your preferred premium payment split between super and out of your own pocket (Risk Info, 2013).
Whats the main benefit of a bundled policies?
The flexible linking feature provides you with the opportunity to save up to 15-20% on your premiums and policy fees, while maximising the level and combination of cover that you may require to suit your situation.
What's the main drawback of a bundled policy?
The main disadvantage of a linked policy occurs when you receive a TPD and/or a trauma benefit. Although you are paid out, your total life insurance benefit will be decreased.
The main difference between bundled and standalone policies is the way your total benefit decreases when a claim is paid out.
- Bundled policies. Will payout individually. However, Trauma and TPD benefits will decrease your life insurance benefit as they are paid out.
- Standalone policies. Will payout individually. Trauma and TPD payouts don't take away from your total life insurance benefit.
Access flexi-linking with a superannuation rollover
With the flexible linking option, you can link up your Life Cover policy inside super with other life insurance policies, such as Trauma and TPD Cover, outside super. However, it is important to note that not all super funds that provide life insurance cover with flexible linking benefit for their members. Therefore, you may want to consider a life insurance superannuation rollover.
A superannuation rollover involves transferring the funds in your existing complying superannuation account into a super fund that is held by a life insurance company. You can then use the money in your new super account to meet the premium payments of your Life, Trauma and/or TPD Cover. By rolling over your super into a life insurance provider’s superannuation fund, you can access the flexible linking benefit from the insurer.
Which life insurance policies can I bundle with flexible-linking?
Policies that you can bundle via a flexible linking structure may vary slightly between providers. While the structure of a combined life insurance plan with flexible linking benefit remains the same across providers - Life Cover within super and other life insurance outside of super, it is the type of cover available that you can bundle that may vary from one provider to the other.
As an example, with Asteron Life Complete, you can combine Asteron TPD Cover with Any Occupation definition that is held inside super with Own Occupation TPD outside of super by opting for Split TPD flexible linking feature. You can take advantage of linking features on your income protection policy to gain access to additional options that are not available with cover inside super. It is worth noting that this option is only available with select insurers.
Refer to the following two tables for flexible linking structures example from Asteron and ClearView:
Asteron Life Complete with flexible linking feature
ClearView LifeSolutions with flexible linking feature
Note: ClearView also offers flexible linking option with TPD Cover.
Therefore, it is important to compare this feature across all providers that offer this option to ensure that it matches your requirements. You can easily finding the structure and ownership of life insurance plans with flexible linking feature within the Product Disclosure Statement (PDS).