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Unlike life insurance policies outside of super, payments for your life insurance held within your super fund are deducted from your super balance to pay the life insurance premiums. If you’re comparing life insurance options, it’s important to understand how life insurance through superannuation works, what it covers you for, and what it costs.
No, not all super funds include life insurance. So it’s important to contact your super provider, or check your annual statement, to see if you’re covered with life insurance as part of your super.
No, the Australian Tax Office2 states that: “You can't claim a deduction for a premium or any part of a premium where the policy is taken out through your superannuation, and insurance premiums are deducted from your super contributions.”
This means that you can’t claim tax deductions for life, trauma care, or critical care insurance premiums.
The most basic superannuation based life insurance policies provide three types of cover:
Death cover: The payment your beneficiaries will receive when you (assuming you’re the policy holder) dies; this may be paid as a single lump sum or in fixed regular instalments3.
Total and permanent disability cover (TPD): If you suffer a permanent and lifelong disability, meaning you’re unable to continue working, you will receive a payment to cover your ongoing living expenses4.
Income protection cover: If you suffer an accident or trauma and can’t work for a time period, you’ll be paid benefits to cover your ongoing living expenses while you recover5.
Different superannuation funds have different levels of life insurance protection. So if you’ve already got a life insurance policy, it’s important to check with your provider, or read over your annual superannuation statement to see what level of life insurance you’re receiving.
Alternatively, if you’re thinking of purchasing a life insurance policy, and you’d like to learn more about policies that may be right for you, feel free to call us on 13 19 20.
The ASIC advises you to call your superannuation provider or check your annual statement1. Make sure to check all of you superannuation accounts if you have funds with multiple providers.
It’s also a good idea to check:
After checking what your superannuation life insurance cover provides, you can start comparing life insurance outside of super policies with Lifebroker. You can compare policies online, or call us on 13 19 20, and speak to one of our expert life insurance advisors.
You can also use your superannuation policy for baseline life insurance, and take out an additional policy to get the extra features you need, thereby topping up your level of total life insurance to get the right balance for your needs.
Some things to consider when comparing policies are: