Important things to know about Insurance inside super

Jan 2023

Life insurance is one of the best ways to protect yourself and those you care about most.

So it’s reassuring to know that most superannuation funds offer a built-in life insurance policy – also known as insurance inside super (IIS) – to their members. For many Australians, this is a simple and affordable way to manage life insurance.

However, it’s important to regularly check the insurance cover inside your super to make sure it meets your needs. For some people, purchasing a life insurance policy outside of super may be preferable.

What does IIS include?

Although it’s still life insurance, whether you buy it in or out of super, the insurance policy offered by your superannuation fund may include up to three distinct types of cover:

  • Life insurance, which pays a lump sum to your beneficiaries if you die;
  • Total and Permanent Disability (TPD) insurance, which is for serious accidents or illness that permanently stop you from working; and
  • Income Protection insurance, which provides a regular payment during prolonged illness.

Most super funds that offer IIS allow their members to choose how much of each type of cover they need.

What are the benefits of IIS?

Depending on your circumstances, IIS can be a great way to obtain cover.

IIS premiums are paid out of your superannuation account, which can be beneficial if your cash flow is limited and may offer some tax advantages over retail policies. Premiums are paid from your pre-tax income, so money isn’t taken from your savings account for this purpose. In addition, super funds may automatically accept you for cover without requiring a health check.

How much cover do I need?

Whether you opt for IIS or retail cover, it’s important to think carefully about how much cover you need and to review your policy when life changes occur.

For example, young people who are renting and have no dependants may need less life insurance cover than someone with a partner, children and a mortgage.

By contrast, younger people who become unable to work may need more TPD cover than older people.

Some super funds provide online calculators to help their members figure out how much cover they need.

Remember, life insurance is for those you leave behind so they don’t experience financial hardship. When choosing your coverage, some basics to consider are:

  • Mortgage debt;
  • Cost of your children’s education;
  • Your past and current health situation;
  • Time to grieve.

For TDP insurance, consider:

  • Your required medical treatment;
  • Modifications to your home;
  • Basic living expenses for the rest of your life.

What’s next?

Speak to your super fund to see if you have insurance inside your super and what level of cover you have.

While care has been taken in preparing this content, MetLife Insurance Limited (ABN 75 004 274 882, AFSL 238096) (MetLife) does not warrant or represent that the information, opinions or conclusions contained in this information are accurate.  The information provided is general information only and is current as at the time of production. It has been prepared without taking into account your personal objectives, financial situation or needs and you should consider whether it is appropriate for you. It is not intended to be a substitute for professional advice and should not be relied upon as such. MetLife recommends that you obtain independent and specific advice from appropriate professionals before implementing a financial strategy, including reading any relevant product disclosure statements and/or terms and conditions. 

Before deciding whether to acquire, or continuing to hold, any of our products, please read the Product Disclosure Statement and Target Market Determination available at MetLife Protect is issued by MetLife and MetLife Protect Super is issued by Equity Trustees Superannuation Limited
(ABN 50 055 641 757, AFSL 229757) (ETSL).

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