Sponsored Sponsored: Look to your super for insurance
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Sponsored: Look to your super for insurance

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Australians are estimated to be paying an extra $3.6 billion a year in 'loyalty taxes'. Photo: Shutterstock
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Most of us know we should insure against the unexpected, but many don’t know this can be done easily and cheaply through superannuation.

If, like many Australians, you are too busy to look through your superannuation documents, you may be surprised to find insurance products available through your fund.

Industry Fund Services executive manager strategic partnership Frank Gayton says in addition to life insurance, super funds also offer total and permanent disability (TPD) cover and income protection.

Work injury
Loss of income from work injuries can be financially debilitating.

TPD, sometimes referred to as living death cover, is used if you become seriously disabled and cannot return to work. Income protection is designed as a financial aid should you injure yourself or become severely ill and cannot work.

The Australian financial market is crowded with insurance companies, but Mr Gayton says organising insurance through your super fund can be cost-effective and simple.

“It depends on your age, but generally speaking it’s cheaper to insure through super because it’s paid through your contributions,” he says.

What’s more, super funds often buy insurance policies in bulk so the savings are passed on to customers.

Premiums are automatically deducted from your super account, not your after-tax income so there may be advantages come tax time.

According to the Australian Securities and Investment Commission, every employer’s default super fund must offer a minimum level of life insurance. The level of cover is determined by your age and you are free to increase, decrease or even cancel your default insurance cover.

Yet Gayton says many consumers are unaware of their insurance options through super and don’t have the proper cover to protect themselves in the event of something unfortunate and unforeseen.

“I think a lot of people have no idea of what’s available and just don’t think about it,” he says.

“So the sum of insurance they have is inadequate because they have never thought about it.

“In some cases, these people then have to rely on family and friends to help them get through. I know some people who have lose their houses.”

For those who pay little attention to their superannuation affairs, there is a risk of paying twice as much in insurance premiums if they have more than one super account. Avoid wasting your precious super contributions and rollover your extra funds.

It pays to research your insurance choices through your super account and the level of cover provided, Gayton says.