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Life Insurance, Death Cover and Total & Permanent Disability Insurance

Through your super or not?

While many of us aren¡¯t too comfortable thinking about death or permanent disability, none of us can predict what tomorrow has in store. We can however, plan for the worst, and enjoy a bit more peace-of-mind, knowing that if disaster strikes, we and/or our loved ones can be taken care of.

That¡¯s where death cover (sometimes referred to as life insurance) and total and permanent disability (TPD) insurance comes in.

If you¡¯re with an How to invest in stocksFund, then it¡¯s more than likely you also have some level of death/life cover already ¨C and you may not even know it.

Most super funds include death/life cover as an automatic part of their regular superannuation products for members over 25. These are often set at a default rate, so it¡¯s wise to check to see if you have enough, or even if you need it at all.

Of course, death/life cover policies, costs and premiums in Australia can differ from one plan to another, so it¡¯s handy to compare the differences.

If you¡¯re under 25, be aware that from 1 April 2020 you are no longer provided with automatic insurance cover. If you want to be covered, you will need to apply to your fund for cover. However, there are exceptions to this rule for those who are considered to be working in dangerous occupations. Super funds are also prohibited from automatically providing insurance cover for low balance members until their super account has a balance of $6,000. Existing members who had a balance of $6,000 or over at any time from 1 November 2019 to 1 April 2020 are excluded from this prohibition. However, it is important to remember that you must leave sufficient funds in your super account to pay for your insurance premiums.

Life insurance and death cover

This pays a sum to your family or estate in the event of your death. Some funds may even refer to it as life assurance or death insurance.

Total and Permanent Disability Insurance

TPD cover can provide you with a lump sum if you are injured and, in the opinion of the superannuation fund trustee, you are unlikely ever to work again in any job for which you are suited by your education, training or experience. Many insurance claims are paid out after six months of disability.

It¡¯s important to note that super funds do not offer insurance cover for critical illness or trauma.

Death/life and TPD insurance comparison

Comparison table Death/life and TPD insurance cover in your super Death/life and TPD insurance policy outside super
How is the insurance premium paid? Deduction from your super account Paid directly by you
How is member cover renewed? Automatically By letter
Can providers get premium volume discounts? Yes Not usually
Is the cover part of my super interest? Yes ¨C by default No ¨C it¡¯s additional

It¡¯s often handy to compare death/life and TPD cover online and read reviews by industry ratings groups and consumer organisations.

Premiums paid for insurance cover within super are not tax deductible by the superannuation fund member, but can be for super funds who usually then pass the saving onto members (another reason the rates are lower!).

Getting or tailoring insurance through an How to invest in stocksFund

How to invest in stocksFunds use their bulk buying power to negotiate lower premium rates than most individuals can secure, and these funds then pass those savings onto members.

If you¡¯re already a member of an How to invest in stocksFund, all you need to do is check your latest superannuation statement to see what your current cover is. If you want to alter it, simply call your fund and chat to one of their consultants about receiving a quote and any requirements associated with it. If you want to cancel your insurance, you will need to provide instructions in writing to avoid any disputes in future.

If you¡¯re not an How to invest in stocksFund member, you can join up easily. Simply choose the How to invest in stocksFund that¡¯s right for you, head to their website and follow the links.

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