Life Insurance through Your Super

Life Insurance through Your Super

Life Insurance through your Super is a topic that must be discussed at length for a few reasons, firstly Life insurance can be an uncomfortable topic as many people do not like talking about the future and the possibility of accidents or death. As such, very few make life insurance a priority. However, different stages of life can bring different types of stress to a family, so it is important to consider protecting yours.

Getting folks to buy into the idea of life insurance is the first hurdle. The hesitation may be due to a lack of knowledge, fear of choosing wrong, and potentially wasting hard-earned money.

But here is the good news: you might already have life insurance without actually buying life insurance.

Superannuation providers often have insurance attached to their policies, which means that you may have been covered for a while now. For instance, most policies include a default life insurance and total and permanent disability (TPD) insurance—some even offer additional income protection.

Does your super have insurance?

Super companies automatically provide a default insurance policy to those over 25 years old, have over $6,000 in their super account, and do not have inactive accounts.

If you have multiple super accounts, you might want to consolidate them to avoid paying excessive amounts for insurance.

Why do you need life insurance?

Insurance only works if you have it before a catastrophic event occurs. Unfortunately, there is no way to predict when these incidents would happen. What if you hit your head tomorrow and could not return to work, or you suddenly die from a heart attack? How would your family survive? Buying insurance is a proactive way to protect your family from unexpected adversities.

Life insurance allows your family to maintain a certain level of income in the event that you pass away or cannot to work. The policy could also cover your debts, so there is less burden on your loved ones.

Around 70% of workers in Australia hold insurance through their super. Still, you also have the option to buy an independent policy. Before you decide which is best for you, let us first discuss what your default super insurance includes.

What does your super insurance cover?

As earlier mentioned, default policies inside a super include life insurance, TPD insurance, and some form of income protection.

Life insurance protects your family in the event that you die unexpectedly. TPD insurance covers you if you are unable to work due to permanent injury or illness. Income protection can help in times when a temporary injury prevents you from going back to work.

What are the pros and cons of default super insurance?


  • Automatically deducted from super
  • Lower premium fees
  • Less health scrutiny
  • Only 15% tax


  • Limited cover
  • It does not specify coverage
  • It reduces super balance over time when no contributions are made
  • You cannot choose your beneficiary
  • TPD insurance ends at age 65
  • Life insurance ends at age 70

Keep in mind that your super only provides basic insurance—that might not be enough to protect you and your family. To assess the level of protection you need, evaluate your situation and weigh the pros and cons. Note that the super industry recommends that you buy insurance that does not cost more than 1% of your annual salary.

You can call your superfund provider to know exactly what your policy includes. Be sure to look for errors, discrepancies, or any wrong information that might have accidentally categorised you as high-risk.

What if I want to change the cover in my super?

If you would like to keep your super insurance to benefit from lower premiums and reduced tax but want more cover, it is possible. Try talking to your superfund provider and ask for a change of cover. Then, choose a life insurance policy that better fits your needs and request to have it applied within your super.

Once you have identified what kind of cover you need, you can start comparing super funds with other policies. Check out our comparison tool here at Makes Cents so that you can make an informed decision about your super!

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