Super Life Insurance

Mitch Ramsbotham

Financial Expert Updated on July 15, 2022

i Disclosure statement

Many superannuation funds offer life insurance to be purchased and paid for through super acting as a financial safety net in times of toughness when you need financial support the most.

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When it comes to life insurance, there can be a lot to consider from how much cover you need, whether you need personal financial advice andwhich types of personal insurance are right for you.

One way to access life insurance is through your super fund. 

Most super funds offer a basic level of insurance cover for their members – with the ability to switch it off if you wanted to, or adjust the cover to meet your needs.

Life insurance held within super is extremely common, with more than 70% of Australians who do have life insurance, holding it through their super fund.

So what do you need to know about holding life insurance policies through your superannuation?

How Insurance in Super Works

Most super funds provide their fund members with a variety of insurance options. This is an additional option and you can choose to get insurance outside the fund as well. However, some super funds have automatic cover that you may need to manually opt out of if you do not want to choose this option.

If you hold life insurance through your superannuation fund, your premiums come from your super balance. It works well for some because the money is not taken from their take-home pay.

The downside to this approach is that it reduces the balance of their super fund account. This means you may need to keep an eye on your super balance and how this will affect your retirement savings as well.

Types of Life Insurance in Super 

Members of super funds usually have access to three forms of life insurance:

  1. Life cover/death cover
  2. Income protection insurance
  3. TPD insurance
  4. Life Cover/DEATH COVER

Life cover is sometimes known as death insurance. When someone dies or has a terminal disease, this provides a lump payment or an income stream to beneficiaries.

Total and permanent disability (TPD) insurance

TPD insurance cover offers a payout if you become seriously disabled and are unlikely to return to work ever again.

  1. Income protection insurance

Income protection insurance is often known as pay continuation insurance (salary continuance). If you are unable to work due to a temporary disability or sickness, this offers a regular income for a set amount of time (this might be two years, five years, or until a particular age).

Trauma insurance is not available to be purchased through superannuation funds.

Most super funds will automatically include life insurance and TPD insurance. Some will also give income protection insurance automatically. This insurance is for a certain sum and is usually accessible without a medical exam.

TPD insurance in super generally expires at the age of 65. Life insurance often expires at the age of 70. Outside from super, coverage normally lasts as long as you pay the payments however, keep in mind, ever policy is different.

Who Can Get Life Insurance Cover in Super?

Anyone can apply for insurance through their super fund if it is available.

Insurance is frequently supplied automatically to qualifying members of the super fund.

Therefore, eligible members will not be required to answer any health and lifestyle questions (known as underwriting questions), which might result in higher insurance prices or specific exclusions based on health or lifestyle concerns.

When Insurance Through Super Is Not Automatic 

There are certain restrictions, though, and not everyone will qualify for automatic life insurance through super.

For example, to be eligible for automatic (default) insurance through an employer super plan, the employee must:

  • be at least 25 years old
  • have an account balance of at least $6,000 in their super account, AND
  • have had a contribution placed into their account within the past 16 months.

In most circumstances, the insurance starts immediately after the employee meets these qualifying requirements. If they desire insurance via the employer plan but are not yet eligible, they usually have a window of opportunity to enrol when they start their new employment. 

Benefits of Insurance Inside Super

There are real benefits to getting insurance inside super instead of getting it another way.

  • Super fund providers purchase their insurance at a bulk rate, so the premiums will likely be lower.
  • Payment for the insurance premiums comes directly from your super account which can be convenient and help avoid any financial burdens.
  • Paying for life insurance through your superannuation may offer tax benefits. The premium is paid from pre-tax income if the employee or employer pays pre-tax contributions to the super fund. The fund deducts a premium for life and TPD insurance from the super account. 
  • Most super funds do not require a medical exam which can be appealing to those who may not be able to receive cover from other insurance providers due to medical history or thit peroanl circumstances (ie. if you have a dangerous job or have pre-existing medical conditions).

Not sure where to start, or want help securing the right insurance faster? Let us help you find the best solution for your needs.

Talk to a Finance Expert

Considerations for Insurance Inside Super

It is vital that that uou decide whether insurance inside super is the best option for your needs. For instance, a person with loved ones needs to know how they will cope should something happen to a primary earner.

On the other hand, a person with no dependents might think they do not need life insurance. However, they will still need to cover their financial obligations if they are disabled. That is why TPD insurance and income protection is relevant to many people’s financial situation – whether you have a family or not.

Pros and Cons of Life Insurance Through Super


  • Cheap premium options – because the super fund purchases insurance policies in bulk, premiums are frequently lower.
  • Simple and convenient to pay – Insurance premiums are immediately withdrawn from the super amount, making them simple and convenient to pay.
  • Fewer health checks – Most super funds will accept an employee for a default level of cover without doing any health tests. This might be handy for those who work in a high-risk occupation or have health issues that make obtaining insurance outside of super difficult. Check the product disclosure statement (PDS) for exclusions of pre-existing conditions.
  • Increased coverage – An employee can typically expand their coverage over the default level. However, they will almost always be required to answer questions about their medical history and undergo a medical examination.
  • Tax-effective payments – Super contributions and salary sacrifice contributions made by the employer are taxed at 15%. This is less than the marginal tax rate for the vast majority of people. This can make paying for insurance through your superannuation extremely tax-efficient (compared to direct life insurance).


  • Limited cover — The amount of cover available in super is frequently less than the cover available outside super. Default insurance through super is not tailored to personal circumstances like financial situations, and some qualifying criteria may apply. It’s important to understand how much cover you need and whether your super fund can provide the right insurance solutions for you.
  • Inflexible Cover – Coverage may be terminated if the person moves super funds, the payments cease, or the super account becomes inactive.
  • Less retirement balance – Insurance premiums are taken from your super balance, which could depete your retirement savings.
  • No trauma insurance options – Super funds do not offer trauma insurance policies to cover emergency medical fees or other financial costs for a critical illness or injury.

How to Check Insurance Through Super

Many Australians hold some sort of life insurance through their super without even knowing it!

Unfortuantely, some people who own more than one super fund are to only paying duplicate superannuation fees, but they may also be paying for life insurance multiple times through different super funds which could be significantly decreasing their retirement nest egg.

It’s essential to know if you hold insurance through your super fund.

To find out if you have insurance through your superannuation:

  • Contact the super fund provider directly
  • Check your super fund’s annual statement (either online or the pepper version)

To find out what insurance options are available to you within your super:

  • Contact the super fund provider directly
  • Go online to access the super account

It is also possible to examine the super fund’s annual report and the product disclosure statement (PDS). This will indicate:

  • What kind of insurance is available through the super?
  • How much coverage is there?
  • Premium totals

A PDS will be accessible on your super fund’s website, outlining who the insurer is, the types of insurance or coverage provided, and the requirements for filing an insurance claim.

Insurance on Inactive Super Accounts

Super funds are required by law to terminate insurance on dormant super accounts that have not received contributions for at least 16 months. Furthermore, super funds may have regulations requiring insurance termination on super accounts with insufficient amounts.

Insurance for People Under 25 or With Low Super Balances

The employee must be at least 25 years old to qualify for super life insurance eligibility. In addition, the balance must be at least $6,000 and have had a contribution deposited into their account during the previous 16 months.

In most cases, the insurance starts automatically if the employee matches the qualifying criteria.

For more queries regarding the various types of cover, including insurance cover, death cover, life cover, and TPD cover, My Money Sorted is here for you. 

You can consult our Financial Adviser Partners for financial advice. A financial adviser can also give general advice or personal advice on information including but not limited to:

  • Insurance products
  • Target market determination (TMD)
  • Relevant product disclosure statement
  • Insurance calculator 
  • Lump sum
  • Fact sheets 

If your insurance needs are complex, it’s important to seek professional advice to ensure you and your family are well-protected if the worse were to happen.


Not sure where to start, or want help securing the right insurance faster? Let us help you find the best solution for your needs.

Talk to a Finance Expert


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