Life 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 Life and TPD Insurance comes in.
If you’re with an Industry SuperFund, then it’s more than likely you also have some level of life insurance cover already – and you may not even know it.
Most super funds include life cover as an automatic part of their regular superannuation products for people 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.
From 1 April 2020, insurance will become opt-in for members under the age of 25. However, there are exceptions to this rule for those who are considered to be working in dangerous occupations.
Of course, life insurance policies, costs and premiums in Australia can differ from one plan to another, so it’s handy to compare the differences.
Insurance has changed
If you hold life and/or TPD insurance through your superannuation account, from 1 July 2019, it may have been cancelled if your account is classified as inactive. Contact your Industry SuperFund to find out more.
This pays a sum to your family or estate in the event of your death. It’s sometimes called Life Assurance or Death Insurance.
Total and Permanent Disability Insurance
TPD cover can provide you with an income if you are injured and, in the opinion of a medical practitioner, unlikely to work ever again in any job for which you are suited. Your education, training or experience are taken into account when determining this. 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.
Life and TPD insurance comparison
|Comparison table||Life and TPD Insurance policy in your super||Life and TPD Insurance policy outside|
|How is the insurance premium paid?||Deduction from your super||Paid directly by you|
|How are policies renewed?||Automatically||By letter|
|Can providers get volume discounts?||Yes||Not usually|
|Is it part of my super?||Yes – by default||No – it’s additional|
It’s often handy to compare 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 account-holder, 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 Industry SuperFund
Industry SuperFunds use their bulk buying power to negotiate lower rates than most individuals can secure, and these funds then pass those savings onto members.
If you’re already a member of an Industry SuperFund, 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 a quote.
If you’re not an Industry SuperFund member, you can join up easily. Simply choose the Industry SuperFund that’s right for you, head to their website and follow the links.