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Is insurance through super right for you?

Education HUB article

5 minute read

Is insurance through super right for you?

When it comes to ‘life admin’, there’s often a lot to keep on top of.

While we’re focused on paying the bills, saving for the future, or setting up the life we dream of, it’s easy to miss some of those other changes which can have an important impact on our lives.

There have been changes to the laws that impact the way people in Australia are provided with life insurance through their super. And these changes could place some members at risk of finding they’re without cover only when they try to make a claim.

Understanding these changes can help you to identify whether you’re likely to be impacted and what your options are if you feel insurance through super is right for you.

Why have life insurance through super?

Life insurance through super provides financial support to millions of Australians and their families at times when they need it most. So, making sure you have the right cover for you, is crucial.

Many super funds automatically provide some level of death and total permanent disablement (TPD) cover to eligible members when joining. Some super funds will also automatically provide income protection insurance. And you’re able to switch this insurance off if required or adjust the cover to meet your needs. This feature of super has provided many Australians with life insurance cover they otherwise may not have had in place.

Putting Members’ Interest First (PMIF) legislation and Protecting Your Super (PYS) legislation - what do they mean?

Introduced from 1 April 2020, the Putting Members’ Interests First (PMIF) legislation affects when cover starts for new members. If you had insurance cover through your super account prior to 1 April 2020, you may no longer have this cover unless you opted to keep it.

You may not have insurance within your super if:

  • You are an existing member with an account balance that did not exceed $6,000 at least once between 1 November 2019 and 31 March 2020. Your cover may have been switched off from 1 April 2020.   
  • You were under 25 years old when you joined your super fund for the first time from 1 April 2020. In this case, cover will not be automatically provided. You will need to have at least $6,000 in your account, in addition to being 25 years old, before cover will be automatically provided.

Additionally, the Protecting Your Super (PYS) legislation (introduced from 1 July 2019), specifies that you may lose cover if your account hasn’t had contributions or rollovers for 16 months. As a result, this means:

  • Your cover will be switched off when your account is inactive for 16 months, unless you’ve told your fund you want to keep it in place.

Why were these changes introduced?

The changes introduced by the PMIF and PYS legislations aim to help prevent your retirement savings from being unnecessarily reduced by insurance premiums for cover you may not need or want.

Limiting the costs that come with insurance cover can allow for better growth in your super balance. So, if you’re a young member or a member with a low balance, paying fewer premiums and fees can have a positive impact over the long term and help to grow your super.  

What if you require insurance?

If you currently don’t have life insurance cover through your super, you can still apply for insurance cover at any time.

It’s important that you consider your personal needs when looking at whether to retain existing insurance cover through super or applying for additional cover.

If you’re unsure whether you have insurance through super or would like to discuss your options, get in touch with your super fund or speak to a financial adviser.

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Want to know more?

Check out our short video Helping you understand insurance through super. 

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Insurance through super explained

Life doesn't always go to plan. If you were to get sick or injured or even pass away, it's likely there would still be bills to pay and loved ones to care for. Having the right life insurance in place can help you manage your finances and support your recovery or help you take care of your loved ones financially if you're no longer around.

One of the ways you can access insurance is through your super fund. Depending on your age and account balance, it's often automatically included when you join. Getting life insurance through your super fund has benefits. But like all financial products, there are things you should think about before deciding whether it's right for you. When you have life insurance with your super fund, they've arranged cover for a large group of people. This means they might offer lower premiums for you and other members compared to getting insurance outside of super, although this depends on your fund and a range of factors, including your life situation.

When you join a super fund, you may have automatically been accepted for cover without requiring a health check. On the other hand, if you were to apply for life insurance yourself, you would need to disclose personal information about your health, lifestyle, and occupation. And because premiums are deducted from your super account, you can still get cover regardless of your financial situation. You'll need to consider how insurance in super will affect your total super balance and how much it will leave for you in retirement and whether the level of cover is right for you. You might also want to check if you have multiple super fund accounts as you could be paying for insurance in each.

Remember, exclusions may apply. The types and levels of cover can be limited, and it generally isn't tailored to your needs. But this doesn't mean you are limited by a one-size-fits-all approach. By contacting your super fund, you can increase or decrease your level of cover to an amount that suits you. You may also be able to access additional product features and benefits. It's worth checking with your super fund to understand what insurance you've got in place now and whether it's right for you. There are many resources available to help you make an informed decision with your insurance. A handy place to start could be ASIC's money smart website which provides information on a range of financial topics. As with any purchase, it's best to compare the costs and details of other life insurance products available to you.

A Wealth specialist can help guide you. Make an enquiry today. 

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Things you should know

Bendigo Superannuation

Bendigo Superannuation Pty Ltd ABN 23 644 620 128 AFSL 534006 (Bendigo Super) is the trustee and issuer of Bendigo SmartStart Super and Bendigo SmartStart Pension (products). Bendigo Super is a wholly owned subsidiary of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL 237879 (Bank). Each of these companies receives remuneration on the issue of the products or services they provide, full details of which are contained in the relevant Product Disclosure Statement (PDS). Bendigo Super, the Bank and its related entities do not guarantee the repayment of capital invested, the payment of income or products’ investment performance. An investment in these products does not represent a deposit with, or liability of Bendigo Super, the Bank or its related entities. The Bank does not stand behind or guarantee the performance of Bendigo Super in its capacity as trustee and issuer of the products. Bendigo Super is not an authorised deposit-taking institution within the meaning of the Banking Act 1959.

Information on the website is subject to change without notice. Any advice in relation to superannuation is provided by Bendigo Super. The information contains general advice only and does not take into account your personal objectives, situation or needs. Before making an investment decision in relation to these products you should consider your situation and read the relevant PDS accessible through this site.

Bendigo and Adelaide Bank acknowledges Aboriginal and Torres Strait Islander peoples as the First Peoples of this nation and the Traditional Custodians of the land where we live, learn and work. We pay our respects to Elders past and present as it is their knowledge and experience that holds the key to the success of future generations.

Bendigo and Adelaide Bank Limited, ABN 11 068 049 178 AFSL / Australian Credit Licence 237879. Any advice provided on this website is of a general nature only and does not take into account your personal needs, objectives and financial circumstances. You should consider whether it is appropriate for your situation. Please read the applicable Disclosure Documents before acquiring any product described on this website. Please also review our Financial Services Guide (FSG) before accessing information on this website. Information on this page can change without notice to you.

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