How Life Insurance in Super Works

Most super funds include default life insurance, often called group life cover. This is automatically provided unless you opt out and is typically a basic level of cover.

There are usually three types of insurance offered through super:

• Life cover (death benefit)
• Total and Permanent Disability (TPD)
• Income protection (in fewer cases)

Premiums are deducted directly from your super balance, which means you don’t pay out of pocket. This makes it easy and accessible, especially for younger members or those without existing policies.

How Much Cover Is Included?

Life cover in super tends to be limited. Many people receive somewhere between $100,000 and $250,000 in default cover. That may sound like a lot, but it might not go far if you have a mortgage, children or other long-term financial commitments.

Pros of Life Insurance in Super

• Automatically included for eligible members
• Premiums are tax-effective and don’t impact your day-to-day cash flow
• Convenient and easy to manage

Limitations to Be Aware Of

• Cover amount may be too low
• May end if contributions stop or account is inactive
• Payout may take longer than personal policies
• Some exclusions may apply, especially for pre-existing conditions or high-risk occupations

When It Might Not Be Enough

If you:

• Have dependents
• Own a home or have significant debt
• Are the primary earner in your household
• Want fast, direct access to payouts

Then a personal life insurance policy can provide greater peace of mind and control.

FAQs

Can I keep both super and personal life insurance?

Yes, many Australians choose to hold both. Super can provide a base level of cover, while a personal policy adds flexibility and higher limits.

Will switching funds cancel my insurance?

It can. Always check what happens to your insurance if you change super funds. You may need to reapply or transfer cover manually.

Do I pay more if I get life insurance outside of super?

Not always. While premiums are paid from your take-home income, personal cover often comes with more options and may be better suited to your goals.

Final Thought

Life insurance through your super can be a good starting point, but it’s often not enough to fully protect your family. It’s worth checking your current level of cover and comparing it to what you might really need.

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