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Income protection through superannuation is often cheaper than a normal income protection policy, but there's a reason for that. Lots of policies only cover you for a few years and might not pay you enough to get by.
It is common for superannuation funds to offer income protection to their members. Income protection cover through super is similar to stand-alone cover but is often a more affordable option as the policies are sold in bulk. Premiums are also deducted directly from your super balance, making it very convenient as well. Most Superfunds will cover 75% of your income in the event that you are unable to work due to illness or injury.
Income protection from your superannuation is an easy and affordable way to protect your income if you're unable to work due to illness or injury. However, it does have its limitations. If the conditions of income protection from your super are too restrictive, you should consider looking at a standalone policy instead.
Use our comparison table to see how standalone income protection stacks up against income protection through super.
An adviser can help you find cover from trusted life insurance brands.
Weigh up the pros and cons of income protection through superannuation to see if it's worth it.
If you need to lodge an income protection claim through your super, you will generally need to follow these steps:
Your claim will then be assessed by the insurer. However, keep in mind that to receive a benefit, you must satisfy two criteria:
Unlike death cover and TPD (total and permanent disability) insurance, income protection through super isn't always automatically included when you join a super fund. Instead, you may need to apply to have income protection cover included as part of your fund membership.
If you don't have any income protection insurance in place and you'd like to take out cover, this is usually a simple process. In most cases, you can apply for cover online through your super fund's online member portal. If that's not an option, or if you've forgotten your login details, call your super fund directly.
Yes. For instance, it's possible to have more than one income protection policy through your super if you have more than one super account. It's also possible to have an income protection policy from your super fund and a standalone policy.
However, this doesn't mean that you will receive payments from all of them. Most payouts are capped at 75% of your income. This includes benefits from other policies, meaning no matter how many policies you take out, you'll only get up to 75% of your income. So if you have two income protection policies, you're paying double the premiums but will only receive cover for the amount of one policy.
Payments for income protection insurance through superannuation are not tax-deductible. If you buy a standalone policy, though, those premiums are tax-deductible.
You generally can't claim a tax deduction for a payment for a policy that compensates you for things such as physical injuries, or for a payment that is deducted from your super contributions. Income protection outside of super is tax-deductible though, because it does not directly compensate physical injury; rather, it is insuring your ability to earn an income.
Yes. In most circumstances, you will find that the level of cover offered by income protection insurance from your super differs from standalone policies in the following ways:
Yes, you can remove your income protection policy from your super at any time. Simply get in touch with your super fund or check your super's online member portal. You'll need to have your login details to gain access to the account. Before you cancel, though, consider whether it's worth keeping:
Deciding whether to get income protection insurance from your superannuation or as a standalone policy will depend on your individual needs and circumstances. Here are some of the factors to consider when weighing up which option is more suitable for you:
Weighing up all the pros and cons of income protection through super can be complicated. You can make a secure enquiry to receive a quote for cover or find out more by entering your details in the form above.
Super funds usually offer two other types of life insurance as well as income protection. These are:
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