Insurance through super: everything you need to know
Did you know you can have insurance cover in your super fund?
If you have super, you might also have some automatic insurance cover.
It’s called insurance in super and is exactly what it sounds like – insurance cover available through your super account.
Insurance in super is designed to assist you and your family financially if you become unable to work due to illness or injury or in the event that something happens to you.
Why get insurance through your super?
Having insurance through your super can help protect you and your loved ones when you need financial security the most.
Insurance in super can also be tax effective and convenient. This is because the cost of your insurance cover, also known as premiums, are deducted from your super account – which means your take home income won’t be impacted.
When you have insurance in super, the premiums are paid from your super balance. This means you don’t have to pay premiums from your own pocket. However, your employer may, or you can make contributions to assist in funding the premiums. It is important however to check how much you’re paying in insurance administration fees and be aware that having insurance in super will reduce your super balance.
Types of insurance cover
| Death insurance cover
|
Total & Permanent Disablement insurance cover | Income Protection insurance cover |
| If you die or you’re diagnosed as likely to die within 24 months due to a terminal illness – you’ll be able to financially assist your loved ones through a lump sum benefit. | If you become totally and permanently disabled, Total and Permanent Disablement (TPD) cover can help ease financial pressures by paying you a lump sum benefit amount. | If you’re unable to work due to illness or injury, Income Protection cover can provide you with ongoing income and financial support by paying you a regular income. |
Find the right insurance cover for you
The right level of cover for you depends on your personal circumstances, lifestyle and future needs.
When you look at insurance cover and how much you need there are several things to consider, including:
- Day to day living expenses that your salary covers.
- Any debts – mortgages, credit cards, personal loans.
- How much income you (and your family) need to live comfortably.
- Future costs such as medical care, education for your children or yourself, and the costs associated with anyone you support financially.
How much does insurance cost through super?
The cost of your insurance cover may depend on your age, gender, occupation, medical history, health factors, lifestyle, income and employment arrangements.
Things to consider with insurance through super
It’s important to know that your retirement savings are reduced by the cost of your insurance premiums. That’s because premiums are deducted from your super balance to pay for your insurance cover.
You need to check what other insurance cover you may have. If you have more than one super account, you may be paying premiums for multiple insurance covers you may not need. This will reduce your retirement savings, and you may not be able to claim on multiple covers. You can search for any other super account you may hold online using MyGov. You may also hold insurance cover outside of your super account.
The type and amount of insurance cover that’s right for you depends on your personal, family and financial circumstances – as well as your income and lifestyle. As an example, an expanding family or a reduction in personal debt may impact your choice of the type and amount of cover you have.
A financial adviser can help you decide the insurance cover that’s right for you and way to pay for your premiums in super.
Keep an eye on your insurance cover
You should be aware that your insurance could be cancelled if your account hasn’t received contributions for at least 16 months, unless you have elected to keep it.
If you want your insurance cover to continue in an existing super account which hasn’t received any recent contributions, you need to contact your fund and opt in to retain any insurance in your account or make a contribution to your account.
Get in touch with the team at ADR Wealth to ensure you are protecting what matters the most.
Source: MLC
