Insurance Through Super

Many super funds arrange life and disability cover for their members. Insurance is arranged by the super fund trustee, acting on behalf of the members of the fund. Having an insurance cover for accidents and illness can provide a sense of security for you and your family.

Types of Insurance Available Through Super Funds

Super funds typically have three types of insurance for members: death cover also known as life insurance-your beneficiaries receive a benefit if you die-; total and permanent disability (TPD) cover – you receive a benefit if you become seriously disabled and are unlikely to ever work again- and income protection (IP) cover – you receive an income stream for a specified period if you can’t work due to temporary disability or illness-.

Your employer’s default fund must offer a minimum level of life insurance, depending on your age. You may choose to increase, decrease, or cancel your default insurance cover. Life insurance benefits are paid as either as a lump sum or as an income stream.

Your super fund’s product disclosure statement (PDS) usually has details of the insurer and the cover available. You can also get these details by contacting your super fund. Don’t be afraid to ask as many questions as you need to. You may consider getting financial advice if you have broader questions about insurance or other financial products that are suitable for you.

Like other insurance policies, you will pay insurance premiums. These are deducted from your super account balance. Many super funds have a default level of cover that provides a small amount of insurance. However, you can choose to increase or decrease your level of cover to meet your needs.

Why Insure Through Super?

There are benefits in getting life insurance through super: it’s often cheaper because super funds purchase insurance policies in bulk, there may be a tax advantage because the premiums are paid from your super account and not your after-tax income, you can get the cover you need for you and your family even if money is tight, it’s easy to manage because premiums are automatically deducted and some funds automatically accept you for cover without requiring a health check.

Insurance premiums through super still cost money. Consider topping up your super so your nest egg continues to grow over time.


You also need to be aware that:-

  • The types of insurance available are limited
  • The level of cover may be limited
  • If you move to a different super fund or your employer’s super contributions stop, your cover may end without notice
  • If you have more than one super fund you may be paying for insurance in each fund, which may be an unnecessary cost
  • Tax may be payable on some benefits
  • There can be delays in the payment of life insurance benefits as these go to the fund first, who then distribute them to you or your beneficiaries
  • If you do not make a binding beneficiary nomination, or your fund does not offer binding nominations, the super trustee will decide who gets your benefits when you die. Usually benefits are paid to dependents, after taking your wishes into consideration
  • If your super recipient is not a dependant consider getting financial advice as there may be tax implications

See insurance agencies to work out what type and how much insurance you should get.

The key to deciding if you want insurance through your super fund is knowing how much cover you need and whether your super fund will offer the full amount. Being insured through super is generally a cost-effective and easy option. Just remember that if you change funds, your insurance cover may be terminated.