Life insurance through your super

Life insurance through your super


Over 70% of Australians have life insurance through their super fund. This acts as a financial safety net through your super if something unexpected happens.

There are 3 main types of life insurance that super funds usually provide:

  • Life cover: Also known as death cover, this type of insurance pays a lump sum or income stream to beneficiaries when you die or have a terminal illness.
  • TDP (total and permanent disability) insurance: If you become disabled or it is unlikely that you will be able to work again then this insurance will pay you a benefit.
  • Income protection insurance: Also known as salary continuance cover, pays a regular income for a specified period (length of time or up to a certain age) if you are unable to work due to temporary disability or illness.

Pros of life insurance through super

  • Cheaper premiums: Super fund buys insurance policies in bulk so it is cheaper for their customers
  • Easy to pay: Automatically deducted from super’s balance
  • Fewer health checks: Super funds accept default level of cover without health checks – particularly useful if you have a high-risk job or health conditions. But, remember that you should check the product disclosure statement (PDS) to see exclusions and treatment of pre-existing conditions.
  • Increased cover: You have the flexibility to increase your cover above the default level but you may need to answer some questions about your medical history.
  • Tax-effective payments: Employer’s super contributions and salary sacrifice contributions are taxed at 15% which is lower than the marginal tax rate for most people.

Cons of life insurance through super

  • Ends at age 65 or 70: While outside of super, your cover will continue as long as you are paying premiums, but TDP and life insurance tend to end at 65 and 70 respectively.
  • Limited cover: Since default insurance isn’t specific to your requirements, your cover might be lower than what you would receive outside of your super.
  • Cover can end: In some cases, changing your super fund can cause your contributions to stop or your super account to become inactive – this will end your cover and you will end up with no insurance.
  • Reduces your super balance: Since premiums are deducted from your super balance, you will have fewer savings for retirement.
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If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.


Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.


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