Many superannuation funds offer automatic life and disability insurance while other funds let you nominate how much cover you would like in place.
Either way, a good starting point is to check if you are covered at all – and how much cover you have in place.
Buying life insurance through super can represent good value. In addition, the premiums come out of your super account – you don’t have to pay for cover using your after-tax money. So it can be very tax-friendly to hold insurance through super (but you should check with your accountant or tax agent), and a very affordable way to have insurance in place if your budget is tight. But bear in mind, you’re using your retirement savings to fund the cover.
Your superannuation fund may provide automatic cover, which means you may not have to undergo a medical check to be eligible for cover. Having insurance through your super means you don’t have to worry about renewing your cover each year – your fund may do this automatically on your behalf.
It is important to check your level of cover through your super fund and ensure it is adequate for you – and your family’s needs. If it looks as though you may not have adequate cover in place, it should be easy to top up your insurance by contacting your super fund. Your cover may also be unit based, meaning the sum insured reduces as you age.
Bear in mind, if you purchase insurance through your super, there could be implications if you change funds. Importantly your insurance cover with the old fund may be cancelled. It's possible that the terms of the insurance available through your new fund will differ from your old fund. This could affect both your level of cover and premiums. You might also be uninsured while you change funds. This is something worth discussing with your Financial Adviser if you are thinking about changing super funds.
If you have life cover through super, make sure you have a binding beneficiary nomination in place that states who you would like to inherit both your life cover and your super if you pass away.
Benefits payable with respect to insurance held through super are subject to superannuation law, which means the trustee of the superannuation fund can only release the payment to you where a condition of release has been met. The tax implications of benefit payments are complicated, so it's good to speak to a Financial Adviser about the best choices to you.
BT Protection Plans and BT Protection Plans for Mortgage Customers are issued by Westpac Life Insurance Services Limited ABN 31 003 149 157 (WLIS), except for Term Life as Superannuation and Income Protection as Superannuation which are issued by Westpac Securities Administration Limited ABN 77 000 049 472 (WSAL) as trustee of the Westpac MasterTrust ABN 81 236 903 448. WLIS and WSAL are wholly owned subsidiaries of Westpac Banking Corporation ABN 33 007 457 141 (the Bank). The Bank does not guarantee the insurance. This information does not take into account your personal circumstances. Terms and conditions, and limitations and exclusions apply. Read the Product Disclosure Statement to see if this insurance is right for you.
© BT Financial Group – a division of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714