1. Types of Insurance in Super

Most super funds offer three core types of insurance:

Life Insurance (Death Cover)

• Pays a lump sum to your beneficiaries if you die.
• Helps loved ones pay off debts, cover funeral costs, or replace your income
• Cover amounts typically range from $100,000  to $500,000
• Some funds also pay out if you’re diagnosed with a terminal illness

Total and Permanent Disability (TPD) Cover

Pays a lump sum if you become permanently disabled and can’t return to work.

• Definitions for when payments are made vary:
• Any occupation” is stricter—insurance payments continue if you can’t do any job you’re suited to which means if you can recommence work in a lower paid position then the payments stop
• Own occupation” is more generous as insurance payments continue if you cannot do your normal job-but this is often not provided by super-based cover

Income Protection (IP) Cover

• Replaces part of your income (usually up to75%) if you can’t work due to illness or injury.
• Paid monthly after a waiting period (30 to 90 days is common)
• Benefit period cannot be for more than 2 years
• May be opt-in and therefore not automatic

2. Advantages of Insurance Through Super

• Cheaper premiums—because of the grouping nature and lower quality cover
• Cash flow neutral-paid from your super balance, not your take-home pay
• Group cover—no health check required if you join at younger ages
• Tax-effective—premiums for death and TPD cover are generally tax-deductible to the fund

3. Limitations and Gaps

• Cover amounts may be too low—especially for families with young children or large mortgages
• Premiums reduce your retirement savings over time
• Policy definitions can be restrictive—especially for TPD and IP
• Delays in claims—pay outs can be slower due to trustee oversight

Cover may end automatically if:

• Your account is inactive for 16+ months
• You’re under 25 and haven’t opted in
• Your balance is under $6,000

Important: Always read your fund’s Product Disclosure Statement (PDS) to understand what is and isn’t covered

4. When to Consider Insurance Outside Super

You might need stand alone cover if you:

• Have dependants and want to fully replace your income
• Work in a specialist profession and want “own occupation” TPD
• Need a longer income protection benefit (e.g. up to age 65)
• Want faster claims or more flexible policy options
• Are self-employed and need business-specific cover

Outside cover can offer more customisation—but will cost more, and premiums aren’t always tax-deductible.