Most super funds offer life insurance for their members. If you're reviewing your life insurance, check what cover you have through your super fund so you can compare it with other options.
Here we explain what types of life insurance you can get through your super and the pros and cons of this type of insurance.
What types of life insurance are offered by super funds?
Super funds typically have three types of insurance for members:
Your employer's default super fund will generally provide you with death and TPD cover. This basic cover may be available without health checks. You can usually increase, decrease, or cancel your default insurance cover.
Your super fund's website will have a product disclosure statement (PDS) which explains the insurer they use and details of the cover available.
Like other insurance policies, you will pay insurance premiums. If your insurance is through your super fund, the premiums are deducted from your super account balance.
Cancellation of insurance on inactive and low balance accounts
Super funds will cancel insurance on:
Your fund will contact you if your insurance is about to end.
If you want to keep the insurance, you must tell your super fund or make a contribution to that account. You may want to keep your insurance if you don't have any through another fund or insurer and you have a particular need for it (e.g. you have children or other dependants or work in a dangerous job).
Insurance for people under 25
From 1 April 2020, insurance will not be provided if you're a new super fund member aged under 25 unless you:
Why get life insurance through your super?
There are benefits in getting your life insurance through super:
However, you also need to be aware that:
You may opt for some cover through your super fund, and some cover directly from a life insurer, depending on the cost and the type of cover you need.
Check your life insurance cover before changing super funds
Before switching or consolidating super funds, make sure you can get the death, TPD or income protection cover you want, in your chosen fund. Be particularly careful if you have a pre-existing medical condition or are aged 60 or over, as you may not be able to get insurance again without health checks. Seek financial advice if you are unsure.
How to check the insurance you have through super
To find out what life insurance you have with your super, either call your super fund, check your annual super statement or access your super account online to check:
You should also find out how your super fund is calculating your insurance premiums. For example, if your super fund has classified you as a smoker or blue collar worker, and these risk characteristics aren't relevant to you, you could be paying more for your insurance than you need to.
You may need to call your super fund to check how you've been classified as your annual statement may not provide this detail.
What if you have no insurance through super?
If you discover that you have no insurance through your super fund, and you think you should have cover, call your super fund to find out why and discuss your options.
Claiming on insurance through super
There are some important things you need to know if you're making an insurance claim through super.
Making a claim
To make a claim for insurance through your super fund you will typically need to submit a claim form. If you die, your estate or dependants should contact the super fund to find out how to claim death benefits.
Most super funds provide claim forms on their websites or you can call them and ask them to send you one.
When you make your claim, you may be asked to provide documentation that proves your condition, including medical reports. There may be waiting periods in some cases.
Some funds will allocate you a claims officer to be your point of contact if you have any questions during the claims process.
Unhappy with your super fund's claims process?
If you're unhappy with the claims process or unhappy because your claim is not accepted, complain to the super fund using its formal complaints process. Your super fund's website should have details about how to complain. If not call and ask about the process, or look in the product disclosure statement.
If you're not satisfied with the outcome, take your complaint to the Australian Financial Complaints Authority (AFCA). AFCA will generally not consider the matter unless you have used the superannuation fund's internal complaint process first.
AFCA replaced the Superannuation Complaints Tribunal (SCT) on 1 November 2018. Complaints lodged with the SCT before this date will still be dealt with by the SCT.
You do not need a lawyer to complain to your fund or to AFCA. Of course, you may find it helpful to use a lawyer or other professional adviser if you think the benefits outweigh the fees.
Industry Code of Practice
An Insurance in Superannuation Voluntary Code of Practice started on 1 July 2018 to improve the consumer experience of insurance in superannuation. If your fund's trustee agrees to comply with the Code, you should get better disclosure and claim and complaints handling. Your fund trustee should notify you if it is complying with the Code. You can check this on your fund's website.
To decide if insurance through super is right for you, work out how much cover you need, whether your super fund will offer you this cover, and compare the costs and conditions with other insurance providers.