What you need to know
- Life cover is often included in your superannuation by default.
- It is often cheaper to hold life insurance within super, but cover is more basic.
- Going direct with an insurer gives you more tailored insurance.
Life insurance held within superannuation can help with a payout for your family if you die, get severely ill or become permanently disabled and can no longer work.
Members of superannuation funds may hold up to 3 types of insurance:
This policy pays a lump sum if you pass away during the policy's term. It may also pay out if you're diagnosed with an incurable illness.
Gives a lump-sum payment if you suffer a permanent injury or illness and are no longer fit to work. You'll usually have to be off work for a minimum of 3 or 6 months before your claim can be processed.
Pays a monthly benefit of up to 75% of your income if you're sick or have an accident and can no longer work. This can help you meet the cost of bills and keep your lifestyle going.
Insurance premiums are paid out of the money in your super account, meaning you don't have to pay from your take-home earnings.
|Direct life insurance||Superannuation insurance|
|How do you buy a policy?||Buy from an insurer or via a broker||Cover is often, but not always, included automatically in a super account|
|About the application||Apply online or over the phone. You may need to do a medical as part of the underwriting process||Guaranteed acceptance on shared terms others get through group life cover|
|How much does it pay out?||You have more flexibility to choose how much cover you want, including higher benefits||Your overall cover amount may be comparatively low|
|How do premium payments work?||Payments come out of your bank account, and sign-up offers and discounts may be available||Payments are taken directly from your super contributions, and funds can get beneficial tax relief on premiums|
|How to amend or cancel a policy||Contact the life insurer directly and follow steps to cancel||Edit or cancel your cover in your super account online or in-app|
|How do you choose your beneficiaries?||You nominate your beneficiaries with the insurer when you take out a policy||You'll have to get in contact with your super fund to add or edit your preferred beneficiary|
|Provider||Death Cover||TPD||Income Protection Maximum Monthly Cover||Other Eligibility Requirements|
|Bendigo Bank||$2,000,000||$2,000,000||Up to $20,000 a month or 85% of your salary (whichever is lower)|
|Zurich||No maximum amount||$5,000,000||$30,000|
|AustralianSuper||Unlimited||$3,000,000||Up to $30,000 a month or 85% of|
your salary (whichever is lower)
|BT||Pre-approved amount||Pre-approved amount||The greater of the income ratio and 75% of|
|MLC||No general maximum, but special terms|
may apply for benefits greater than
|Westpac||Pre-approved amount||Pre-approved amount||The greater of the income ratio and 75% of|
To get insurance via your super, you must:
Insurance is typically added automatically once you meet these eligibility requirements.
To make a successful claim with Any Occupation cover, you'll need to be disabled to the point that you can't work in any role suited to your education or work experience. "Own Occupation" cover can be claimed if you're unable to work again in the job you did before your disability.
Financial adviser Brenton Tong, who is group CEO of Financial Spectrum, told Finder: "If you want full coverage for a broader range of events, you need to take out a fully underwritten TPD policy."
💡Quick tip: If you hold insurance within your super, ask the fund for a list of excluded occupations.
You pay the same price as buying directly from the life insurer.
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To find out if you have life insurance inside your super, you can:
This should give you access to the type of insurance you have, as well as how much cover you have and how much you're paying for it.
Our handy guide to self-managed super fund life insurance explains unique features, pros and cons, tax rules and FAQs.