19 Oct Insurance in super
Being insured through super can be a simple and cost-effective option, as most Australians already have a superanuation fund.
Low cost cover
Many superannuation funds offer automatic life 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.
A streamlined option
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.
Check you have sufficient cover in place
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.
Don’t forget a binding nomination
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.
Contact us to set up the policy right for you 1300 512 229
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