What is superannuation insurance? Do I need it?

superannuation insurance

What is superannuation insurance? Do I need it?

With a wealth of options available to you, choosing the right plan for personal insurance can be challenging. From choosing the right amount of coverage to working out the difference between insurance options, the process can become complex.

You may be surprised to learn that superannuation funds offer insurance policies that provide financial compensation if you are temporarily or permanently unable to work.

If it all seems a little confusing, don’t worry. To save you some time, we’ve put together some helpful information regarding insurance options via your superannuation.


What is superannuation insurance?

The term superannuation insurance can refer to several forms of insurance available through your nominated super fund, including:

  • Life Insurance – A lump sum payment is paid in the event of death
  • Income Protection – Regular payments are made to you if you can’t work for an extended period
  • Total & Permanent Disablement (TPD) Insurance – A lump sum payment may be paid to you if you become totally and permanently disabled

It’s very common for people to leverage insurance through their superannuation, with ASIC recently reporting more than 10 million Australians currently hold policies.

Many super funds provide you with life and TPD insurance automatically, while others will automatically offer income protection. To learn if you’re already covered for the above, we recommend checking with your super fund.


How do you pay for superannuation insurance?

Like any insurance policy, superannuation insurance attracts premiums. These premiums are generally automatically deducted from your super balance.


Do you need superannuation insurance?

There’s no definitive yes or no answer to this question. Based on your needs and personal circumstances, it really comes down to what is best for you. It’s also a good idea to get advice from a financial advisor or a similar expert.

TPD, Life insurance and Personal Income Protection all offer peace of mind, whether you have dependents or not. We recommend comparing what’s on offer from your nominated super fund with the external options available to find what works best for you.


What are the pros and cons of superannuation insurance?

Looking for the best personal insurance to suit your personal requirements? Or are you just tossing up between super funds? Here are some pros and cons of superannuation insurance to help you weigh up your options.


Advantages of superannuation insurance

  • Convenience – Your insurance premiums are deducted automatically from your super balance, eliminating the need for you to pay them manually.
  • Affordable premiums – Super funds buy insurance policies in bulk, often making premiums cheaper and more affordable than other providers through group discounts and other benefits.
  • Reduced health checks – Many super funds automatically approve your cover without the need for a health check.
  • Increase cover – If the default amount of cover does not suit your needs, many super funds offer the option to increase your cover.
  • Tax benefits – As employer and salary sacrifice contributions are taxed at 15%, which is typically lower than most people’s marginal tax rate, which makes paying for your insurance through your superannuation tax-effective.


Disadvantages of superannuation insurance

  • Reduces your balance at retirement – Regularly paying insurance premiums directly from your super balance will impact the amount you have to invest, which over-time could impact your retirement balance.
  • Amount of cover may not meet your requirements –The maximum amount of cover provided by super funds can be less than what is available from other insurance providers. Additionally, income protection policies are usually capped at a percentage of your income for a short period.
  • Your cover can end – If you change super funds, you stop making contributions, or your account becomes inactive for longer than 16 months, you may lose your cover. Additionally, TPD Insurance coverage typically ceases at age 65, and Life Insurance cover runs out at 70 years of age.

When can you lodge a superannuation insurance claim?

While the policy terms will determine when you can lodge a claim, most superannuation funds will allow you to lodge a claim for any scenario in which you fall ill or suffer an incident that prevents you from being able to work, including total and permanent disability, from which you are unable to recover.


Making a TPD Claim with Claimify

Making a superannuation TPD claim can be time-consuming, confusing and sometimes risky.

However, it doesn’t have to be. You can eliminate a lot of the hassle by leveraging Claimify’s free super online service to learn if you have a viable TPD insurance up your sleeve.

Our team of experts can assist you with free legal advice so you know where you stand in your time of need. It’s a risk-free and simple online process, and no paperwork or lengthy legal meetings involved.

Additionally, if you are hurt at work, you may still be able to make a workers’ compensation on top of a TPD insurance benefit.

When you’re unable to work, the last thing you want to worry about is paying the bills. With superannuation TPD insurance claims, we’re always in your corner.

Claims made easier.
Claims resolved faster.