Insurance through super
Most super funds offer life insurance for their
members. If you're reviewing your life insurance, check what cover
you have through your super fund so you can compare it with
Here we explain what types of life insurance you can get through
your super and the pros and cons of this type of insurance.
What types of life insurance are
offered by super funds?
Super funds typically have three types of
insurance for members:
- Death cover (also known as life
insurance) - is part of the benefit your beneficiaries receive when you die,
either as a lump sum or as an income stream.
- Total and permanent
disability (TPD) cover - pays you a benefit if you become
seriously disabled and are unlikely to ever work again.
protection (IP) cover - pays you an income stream for a
specified period if you can't work due to temporary disability or
Your employer's default super fund will generally provide
you with death and TPD cover. This basic cover may be available
without health checks. You can usually increase,
decrease, or cancel your default insurance cover.
Your super fund's website will have a product disclosure statement
(PDS) which explains the insurer they use and
details of the cover available.
Like other insurance policies, you will pay insurance premiums. If your insurance is through
your super fund, the premiums are deducted from your
super account balance.
Check your life insurance cover before changing super
Before switching or consolidating super funds, make
sure you can get the death, TPD or income protection
cover you want, in your chosen fund. Be particularly
careful if you have a pre-existing medical condition or are aged 60
or over, as you may not be able to get insurance again without
health checks. Seek financial advice if you are
Why get life insurance through
There are benefits in getting your life insurance through
- It's often cheaper because super funds purchase insurance
policies in bulk
- You can get the cover you need for you and your family, even if
money is tight
- It's easy to manage because premiums are automatically
- Some funds automatically accept you for cover without requiring
a health check
- You can usually choose the amount you want to be covered
Insurance premiums through super still cost money. Consider
topping up your super to cover the cost of your insurance so
your nest egg continues to grow.
However, you also need to be aware that:
- Limited cover - The types of insurance, and
level of cover, may be limited. Cover is not tailored to your
circumstances and exclusions may apply. If you want more insurance,
you can apply to increase your cover and a medical may be required.
If you want a different type of cover, you may need to get this
outside super. Check the PDS carefully.
- Not portable - If you change super funds; have
an extended absence from your employer; your employer's super
contributions stop or your account balance drops below a certain
amount, your cover may cease and you could end up with no
insurance. Always read the information sent to you by your super
fund as they may be alerting you to changes to your cover.
- Slower to pay - There can be delays
in receiving benefits as the insurer pays the
benefit to the fund first, who then distributes it to you
or your beneficiaries.
- Who gets paid - If you do not make a binding beneficiary nomination, or your
fund does not offer binding nominations, the super trustee will
decide who gets your benefits when you die, although your
nomination will be taken into consideration.
- Ends at around age 65 - Life insurance
coverage through super ends when you reach a certain age (usually
65 or 70). Policies outside of super may cover you for
- Reduces super balance - The cost of insurance
premiums are deducted from your super balance, reducing
the money available for your retirement.
accounts - If you have more than one super account, you
may be paying premiums on multiple insurance policies. This could
reduce your retirement money, especially where you can only claim
on one policy. Find out if you are able to claim on more than one
policy, and consider which policy you might cancel. Even if you can
claim on more than one policy, consider whether you need more than
one policy or whether you can get enought insurance through one
- Premiums may increase when you change
jobs - Even if you stay with the same super fund when you
leave your employer, you may be moved to the personal division of
that fund which could increase your premiums for the same cover.
Some funds default members as smokers or blue-collar workers when
they move between divisions of funds, which could significantly
increase premiums, and further reduce your retirement money. Check
your annual statement to see how you have been classified, and
contact your fund if you think the incorrect classification has
been given to you.
You may opt for some cover through your super fund, and
some cover directly from a life insurer, depending on the cost and
the type of cover you need.
Case study: Paula gets more life cover
Paula lives with her partner Sam and their daughter Sarah.
Paula is the main income earner while Sam works part time. Paula
has life insurance through her super fund but it is not enough to
cover the mortgage and support her partner to raise their daughter
if she were to become ill or die. Even if Sam could
return to work full time, his income may still not be enough to
support the family.
Paula decides she needs some additional life insurance
cover, so she compares the cover and cost of increasing her
insurance through super with getting a separate policy outside
How to check the insurance
you have through super
To find out what life insurance you have with your super, either
call your super fund, check your annual super statement or access
your super account online to check:
- what type of insurance cover you have
- how much cover you have, and
- how much you are paying for the cover.
You should also find out how your super fund is calculating your
insurance premiums. For example, if your super fund has classified
you as a smoker or blue collar worker, and these risk
characterisics aren't relevant to you, you could be paying more for
your insurance than you need to.
You may need to call your super fund to check how you've been
classified as your annual statement may not provide this
What if you have no insurance through super?
If you discover that you have no insurance through your super
fund, and you think you should have cover, call your super fund to
find out why and discuss your options.
Claiming on insurance through super
There are some important things you need to know if you're
making an insurance claim through super.
Making a claim
To make a claim for insurance through your super fund you will
typically need to submit a claim form. If you die, your estate or
dependants should contact the super fund to find out how to claim
Most super funds provide claim forms on their websites or you
can call them and ask them to send you one.
When you make your claim, you may be asked to provide
documentation that proves your condition, including medical
reports. There may be waiting periods in some cases.
Some funds will allocate you a claims officer to be your point
of contact if you have any questions during the claims process.
Unhappy with your super fund's claims process?
If you're unhappy with the claims process or unhappy because
your claim is not accepted, complain to the super fund using its
formal complaints process. Your super fund's website should have
details about how to complain. If not call and ask about the
process, or look in the product disclosure statement.
If you're not satisfied with the outcome, take your complaint to
Financial Complaints Authority (AFCA). AFCA will generally not
consider the matter unless you have used the superannuation fund's
internal complaint process first.
AFCA replaced the Superannuation Complaints Tribunal (SCT) on 1
November 2018. Complaints lodged with the SCT before this date will
still be dealt with by the SCT.
You do not need a lawyer to complain to your fund or to AFCA. Of
course, you may find it helpful to use a lawyer or other
professional adviser if you think the benefits outweigh the
Industry Code of Practice
An Insurance in Superannuation Voluntary Code of Practice
started on 1 July 2018 to improve the consumer experience of
insurance in superannuation. If your fund's trustee agrees to
comply with the Code, you should get better disclosure and claim
and complaints handling. Your fund trustee should notify you if it
is complying with the Code. You can check this on your fund's
To decide if insurance through super is right
for you you'll need to work out how much cover you need, whether
your super fund will offer you this cover and comparing the costs
and conditions with other insurance providers.
Last updated: 01 Nov 2018