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Income protection within super vs direct

Compare the pros and cons of getting income protection within your super against a standalone policy.

Income protection directly through an insurers Compare providers
Income protection through a superannuation fund Compare providers

Superannuation income protection insurance: The basics

Many superannuation funds offer income protection to their members. This insurance offers peace of mind and usually pays 70%-85% of your income if you get sick or injured and need to take some time off work.

Millions of Australians are likely to pay for life insurance, such as income protection, and not even know it.

Having multiple super fund accounts means that you could be losing a substantial portion of your balance to account management fees and insurance.

Income protection within super: Key pros and cons explained

Pros

  • Cheaper premiums. Super funds are able to drive down insurance costs and pass these on to consumers by buying policies in bulk.
  • Easier to manage. Having your income cover, life insurance and TPD grouped together is another plus. You'll have less paperwork than buying each of these insurance types from one or more different providers if you were to go direct.
  • Tailor insurance to your needs. Increasingly, super funds are offering customers the chance to tailor their income protection insurance to their needs.

Cons

  • Less certainty when making a claim. Policies are sold under group terms to all members. This can lead you to having a greater chance of a claim being turned down. Whereas with direct insurance, a policy is set up after an insurer commits to you based on your individual circumstances.
  • Benefits are less comprehensive. In general, cover within super may have less flexibility on waiting periods, how long you can be paid for or extra perks such as rehabilitation for certain injuries.
  • Premiums will eat away at your super balance. Money that otherwise would have been invested in your super is spent on your insurance premiums. This can really add up over the years. On the other hand, premiums can be comparatively small within super.

Income protection insurance within super: Compare 9 providers

Here's a quick rundown of the maximum cover limits of some leading providers in Australia:

ProviderMaximum monthly cover
Bendigo BankUp to $20,000 a month or 85% of your salary (whichever is lower)
Zurich$30,000
Suncorp$25,000
AustralianSuperUp to $30,000 a month or 85% of
your salary (whichever is lower)
BTThe greater of the income ratio and 75% of
monthly earnings
ClearView$30,000
MLC$60,000
TAL$12,000
WestpacThe greater of the income ratio and 75% of
monthly earnings

What options do I have for direct policies?

Brenton Tong, financial expert and group CEO of Financial Spectrum

Brenton Tong

For Brenton Tong, it's worth looking into fully-underwritten income protection to help ensure you've enough insurance for your needs.

Tong commented: "Once you start looking into it in detail, a fully underwritten policy you've selected through thorough research is likely to give you much better value for money."

With that in mind, Finder has identified 3 brands that will currently offer $500,000 of income protection cover for under $100 per month.

These were NobleOak ($63.56), Bendigo ($83.55) and Medibank ($84.15) respectively. What you'll actually pay will vary depending on your personal circumstances.

Compare more direct income protection policies in Australia

Name Product Maximum Monthly Benefit Maximum % of Income Covered Maximum Benefit Period Minimum Entry Age Sum Insured
TAL Accelerated Protection Income Protection
$30,000
Up to 70%
Up to
Age 65
18
$1,305 million
Get up to 70% of your income covered with flexible short and long term benefit periods.
AAMI Income Protection
$10,000
Up to 75%
Up to
5 years
18
$222 million
Take out a new AAMI Income Protection policy and get $100 eGift card after your first 4 months of cover. T&Cs apply. Ends June 30, 2024.
ahm Income Protection
$10,000
Up to 70%
Up to
5 years
18
Data not available
Get 10% off your first year of ahm Income Protection when you apply by 1 July 2024. T&Cs apply.
NobleOak Income Protection
$30,000
Up to 70%
Up to
Age 65
18
$65 million
With NobleOak, you can lock in a policy with a benefit period covering you up to the age of 65. Cover limits may go as high as $30,000.
Medibank Income Protection
$12,500
Up to 70%
Up to
5 years
18
Data not available
Save 10% on your first year of Medibank Life Insurance when you apply by 1 July 2024. T&Cs apply.
Insuranceline Income Protection
$10,000
Up to 75%
Up to
5 years
18
$222 million
Protect your family with an Insuranceline policy and you can go into the draw for a chance to win a $1,000 gift card. New Customers only, T&Cs apply. Competition entries close on 31 July 2024.
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Key features to look out for when comparing income protection insurance

Number 1

Monthly benefit

This is the highest possible benefit you'll get while off work and on a claim for your insurance.

Number 2

% of income covered

Some insurers will cover up to 70% of your income. Some providers, such as Aspect, go as high as 85%.

Number 3

Maximum benefit period

This is the maximum length of time you'll be able to claim benefits while you recover. It varies from 2 years, 5 years and up to the age of 65.

Number 4

Expiry age

This is the age at which you will no longer be able to renew your policy. For most insurers, this is when you reach 65 years of age.

Number 5

Indemnity value

You'll need to prove your recent earnings, often for the last 12 months. Under indemnity value policies, the amount you're insured is a percentage of your salary at the time of making a claim.

Number 6

Agreed value

Policies where you could "lock in" the amount you wanted to receive each month during your application are no longer available for new applicants of income protection.

Number 7

Any occupation

This type of policy will cover you only if you can't return to the workforce in any job that's suited to your education and training.

Number 8

Own occupation

This type of policy pays out if you're unable to work in your usual occupation or profession (i.e. the job you have currently been working in).

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