We can provide advice on insurance inside superannuation. This may include advice on adding/changing insurance in an existing super fund, or setting up a new insurance policy with a new super fund.
Why take out insurance inside super?
1. It’s easy
Owning insurance inside super means you may not have to worry about finding additional room in the household budget to pay your insurance premiums. Premiums can often be deducted automatically from your super account balance (if applicable) provided there is enough money in your account.
2. It’s tax-effective
The tax concessions associated with insurance inside super makes super a cost-effective home for life insurance. There are a number of different types of cover that may be available inside super, including Life Cover, Total and Permanent Disablement (TPD) Cover, and Income Protection Cover.
3. In many cases the cover is cheaper
The gross cost of premiums may be lower compared to holding the same policy outside super. Also, Group premium rates may apply which may be cheaper than individual premium rates.
4. It’s flexible
You may also be able to link cover outside of super (such as Trauma Cover) to your super cover which could result in a greater cost-saving benefit for you.
The main implications of holding insurance inside super include:
• Your super balance may be used to fund premiums
• There may be tax to pay on Term Life and/or TPD insurance proceeds paid from super
• Insurance proceeds may be paid less quickly to you
• TPD and/or Trauma insurance proceeds may get trapped in super in certain situations
• Product features may be limited, and
• Your death benefit beneficiaries are restricted.
Note: There is no overall financial benefit from holding Income Protection insurance inside super however, there may be a benefit to cash flow.
There are many factors to consider before holding insurance inside super. Everybody’s circumstances are different, therefore the decision to take out life insurance inside super should be discussed with us, to help determine whether such an arrangement is appropriate for you.
Cancellation of insurance on inactive and low balance super accounts
Under the law, super funds will cancel insurance on inactive super accounts that haven’t received contributions for at least 16 months. In addition, super funds may have their own rules that require the cancellation of insurance on super accounts where balances are too low.
Your super fund will contact you if your insurance is about to end.
If you want to keep your insurance, you’ll need to tell your super fund or contribute to that super account.
You may want to keep your insurance if you:
- don’t have insurance through another super fund or insurer
- have a particular need for it, for example, you have children or dependants, or work in a high-risk job
Insurance for people under 25
Insurance will not be provided if you’re a new super fund member aged under 25 unless you:
- write to your fund to request insurance through your super
- work in a dangerous job – you can cancel this cover if you don’t want it.
 Insurance inside super |  Life insurance |  Income Protection |
 TPD insurance |  Trauma insurance |  Child Cover |
 Key Person - Buy/Sell insurance |