Life insurance through super explained

Life insurance through super explained

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Helping you understand insurance through super

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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.

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What type of life insurance cover is available through your super?

Making decisions on life insurance is a personal choice. But for many, accessing cover through super offers convenient and competitive life insurance solutions. And depending on your age and account balance, cover may have automatically been provided when you joined.

There are a few different types of cover that may be available including death, total and permanent disablement (TPD) and income protection (IP).

• Death cover provides a lump sum payment to your loved ones if you pass away or are diagnosed with a terminal illness. If injury or illness prevents you from being able to work, there are other types of cover that can help provide financial support.
• IP cover replaces part of your monthly income if you’re temporarily unable to work due to illness or injury.
• TPD cover provides a lump sum payment in the event you become permanently disabled.

The benefits of life insurance through super

Super funds usually arrange cover for a large group of people, meaning they might be able to offer lower premiums for you and other fund members. However, this will depend on your fund and a range of factors, including your individual circumstances.

When you join a super fund, you may automatically have cover without requiring a health check. On the other hand, if you were to apply for life insurance yourself, you may need to provide personal information about your health, lifestyle, and occupation.

Having insurance through your super also means you pay for premiums directly from your super account. This means you can get cover regardless of your financial situation, without impacting your monthly cash flow.

What else do I need to consider?

There are a few things to think about before deciding whether insurance through your super fund is right for you.

For instance, the types of insurance and levels of cover available may be limited, and certain exclusions may apply. And because cover isn’t tailored to your circumstances, it’s important to consider what you need.

Recent changes to law have impacted the way insurance through super is provided, so there could be cases where your cover is switched off unless you tell your fund you want to keep it.

And with premiums being deducted from your super, you should consider how that will affect your overall account balance, as well as how much it will leave for you in retirement.

Getting the right cover for you

If you’re not sure what cover you have in place already, or if it’s right for you, you can contact your super fund at any time.  There may be options to adjust your insurance, such as increasing or decreasing your level of cover, or applying for different features or benefits.

There are many resources available to help you make an informed decision about your life insurance. And a handy place to start could be ASIC’s MoneySmart website, which provides information on a range of financial topics.

To learn more about a wide range of topics, visit our Education HUB.