What is insurance through super?
You can purchase Term Life, Income Protection and Total and Permanent Disablement insurance through your superannuation fund. You should talk to a financial adviser or planner to determine the most effective way of buying insurance for you.
Advantages
When you buy insurance through your super fund you are using pre-tax dollars. This can be cheaper than paying for insurance separately from your take-home pay. Super funds can also negotiate discounts with insurers as they are buying in bulk. Some funds will also automatically accept you without the need to undergo a medical check.
Disadvantages
There can be limitations on the level of cover and the benefit periods for income protection insurance, so sometimes the potential benefit in the event of a claim will not be enough.
When making a claim for a death benefit, the claim needs to be assessed by the trustee of the superannuation fund and the insurance company. This may cause a delay in the payment of benefits.
Changing your superannuation fund
If you purchase insurance through your superannuation there are financial implications if you change funds. Most importantly your insurance cover with the old fund may stop. It is also possible that the insurance available through your new fund will differ from your old fund. This could affect both your level of cover and your premiums. You might also be uninsured while you change funds.
Salary sacrifice
An effective way of making additional contributions to your superannuation is through salary sacrificing. Contributions can be made from your pre-tax salary and because they're taxed at just 15% in most cases, it doesn't only boost your retirement savings but it can also be a useful tax-effective investment strategy.
Learn more about Basics
- Facts about insurance
- Why you need insurance
- Types of cover suitable for you
- What is insurance through superannuation?
- How insurance claims are paid
Did you know?
The costs of replacing your home, valuables or in some cases your income can be significant. Insurance can give you a way to manage the consequences of unexpected events which cause financial loss.
There are many types of insurance cover available depending on your individual needs and circumstances.
