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The Benefits of Having Insurance Through Super

An important aspect of the Australian super system is that it provides a range of benefits with one of the biggest being the provision of automatic insurance cover, explains Pauline Vamos from the Association of Superannuation Funds Australia. This means that the majority of people working have access to a basic level of life, Total and Permanent Disability (TPD) and income protection cover.

This is important because while many of us wouldn’t dream about driving a car without comprehensive insurance, it may surprise you that people remain relatively apathetic when it comes to voluntarily obtaining cover for death and/or disability.  This is reflected in the relatively low percentage of Australians who purchase life insurance on an individual basis, compared with those who purchase insurance for their homes or vehicles. By providing insurance through super, more people are protected against the financial shock that can come about as a result of unexpected events.

There are also other advantages to purchasing insurance through super.  For example, group insurance policies purchased through super tend to be cheaper than those outside of super accounts, reflecting a simpler product design, the economies of scale flowing from the negotiation of wholesale contracts and the absence of the costs of distribution and commissions to advisers.  It can also be more tax effective, as you are able to use concessionally-taxed super money, as opposed to paying for premiums outside of your fund with post-tax income.

While benefits exist for purchasing insurance in super, if you are thinking about increasing your insurance cover it’s also worth comparing the policies available outside of your fund in case they may provide benefits that are a better fit for your needs.

The best way to sort out whether or not you have the right level and type of cover is to speak with your fund, or your financial adviser.

To help these discussions along, here are 10 questions that we recommend you ask as a starting point to sorting out your super insurance:

  1. What types of insurance cover do I have at the moment?
  2. If I die, how much will be paid to my beneficiaries?
  3. If I die, who decides who will get my superannuation?
  4. Will I get a payment if:
    • I cannot work for a period of six months?
    • I am terminally ill?
    • I can never work again?
  5. If I get a payment, how much will I be paid, when and for how long?
  6. Can I increase my level of cover without having to be medically tested?
  7. What happens to my insurance if I leave the fund?
  8. What happens to my insurance if I change jobs?
  9. Who should I contact if I need to make a claim?
  10. What impact does paying for my insurance have on my final retirement balance?

These questions will help you sort out your insurance, so that you can be sure you and your family are adequately protected.


Ms Pauline Vamos

Chief executive of the Association of Superannuation Funds of Australia (ASFA), Pauline Vamos is a qualified lawyer and has over 20 years’ experience in the financial services industry. Pauline is a member of the Federal Government’s Superannuation Advisory Committee and was on Treasury’s Stronger Super Peak Consultative Group. In May 2012, Pauline was appointed to the Advisory Council for the newly established Centre for International Finance and Regulation. She also sits on the Infrastructure Finance Working Group and the Superannuation Roundtable.

Association of Superannuation Funds of Australia (ASFA). ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral and non-party political national organisation which aims to advance effective retirement outcomes for members of funds.

For more information about insurance in super, and to download our hand fact sheet, visit

“By providing insurance through super, more people are protected against the financial shock that can come about as a result of unexpected events.”

Related Article


Life Provides a benefit (either in the form of a lump sum payment or an income stream) to your financial dependents, who you can specify or nominate to your fund, when you die.
Total and permanent disability (TPD) Provides a financial safety net if you become seriously ill or permanently disabled and are no longer able to work. Normally paid as a lump sum, it is designed to help cover the costs of adjusting to life with a disability as well as future expenses that may arise.
Income Protection (IP) Provides you with regular income if you can’t work due to injury or illness. It helps you pay your living expenses either until you reach a specified age or you get better.

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Alana Lowes

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