What are the types of life insurance offered by super funds ?

  • February 26, 2021 02:23 PM AEDT
  • Team Kalkine
    Team Kalkine
    Team Kalkine
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Life insurance is something that everyone needs. Especially, the ones who have dependents. Also, an ideal situation calls for opting death benefit, total and permanent disability (TPD), income protection and trauma insurance.

However, this type of ‘assorted’ comprehensive insurance cover can burn a hole in the pocket and may cost as high as thousands of dollars per year. Clearly, affording this is not everyone’s cup of tea.

Also, super fund insurance payment can be done with pre-tax dollars but if one buys insurance outside the super fund, he has to use after-tax dollars.

Types of life insurance in super

Super funds usually provide three kinds of life insurance for their members.

• Life cover - Also known as the ‘death cover’, this cover pays a lump sum or income stream to the policy holder’s beneficiary in case he dies or has a terminal illness.

• TPD insurance – This one gives a benefit if one becomes seriously disabled and is unable to work again.

• Income protection insurance – Also known as salary continuance cover, this one provides with a regular income for a specific span of time if the policy holder is unable to work due to any disability.

Majority of the super funds already come along with life cover and TPD insurance. While a few others offers income protection insurance, this insurance comes with a specific amount and is commonly available without medical checks.

Super funds can cancel insurance too!

In general cases, the super fund contacts the individual if the insurance is about to end. The policy holder might want to retain the insurance if he does not have any other insurance, if he has a particular need for it or basically has dependents.

Insurance for people under 25

Insurance will not be provided if the candidate is a new super fund member less than 25 years of age.

Advantages and disadvantages of life insurance through super fund


The premiums of a life insurance policy via super fund are comparatively lesser because the super fund buys insurance policies in bulk.

Then, the insurance premiums are automatically deducted from the super balance and are easy to pay.

Also, most of the super funds will, by default, accept that the holder already goes through regular health checks. This can be useful if the cover holder works in dangerous circumstances or has health conditions that can make it difficult to get insurance outside super.


A TPD insurance cover in super fund generally ends at the age of 65. Life cover ends at 70. Whereas, outside super fund, any cover continues till the holder is submitting premiums.

Secondly, the amount of cover the policy holder can get via super fund is generally lower than the cover one gets outside super.

If one changes super funds, or the contributions stop or the super account becomes inactive, the cover may end, and the holder could end up with no insurance.

Next, premiums of the insurance are deducted from the super balance. This lowers the savings for retirement.

Key Takeaway

It is quite significant that one has an insurance with superannuation fund to increase the super premiums to cover the cost of the insurance.


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