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Life insurance through superannuation: 5 things you may want to consider

Life insurance through superannuation: 5 things you may want to consider

More than 70%1  of Australian life insurance policies are held through superannuation funds. While an easy-to-opt-in default feature when first signing up for your fund, it might be worth considering the following factors when relying life insurance through super.

1.Is the amount of life insurance payable provided within your super adequate?

Rice Warner estimate that a 30-year-old couple with two children would require an average of $680,0002 in death cover to enable them to meet their expenses. Have you recently reviewed your cover through super to see if it would leave a gap to meet home loan repayments and all other living expenses if you were no longer around to support your family? 

2.Does your super policy include cover for critical illness (also known as trauma)?

Studies have shown that ½ of men and ½ of women will suffer some form of cancer in their lifetime3. More than half of these people will live longer than 5 years after their diagnosis.

Could you survive financially, including meeting your mortgage repayments and other living expenses while on the road to recovery with the amount of benefits from your super fund insurance? After all, a serious illness or injury doesn’t only just take a physical and emotional toll on yourself, but it can severely disrupt your finances as well, and your partners ability to continue working.

Since July 2014, super funds are no longer able to offer trauma cover to new members4. This type of cover provides you with the means to manage the costs associated with a serious disease, such as cancer or stroke – and has since become increasingly important with advances in technology improving the chances of survival and with treatment costs on the rise. So it’s important that you take the time to check what your policy does include.

3.Who receives the benefit funds if you make a claim?

You could have limited control over who is being paid by the life insurance within your super. Often, the super Trustee makes the decision about who receives death benefit funds, even if you have made a nomination. This means that there can be a delay between the time a claim is lodged and the time that your family receives the benefit funds, which could contribute to financial stress, especially if mortgage repayments continue to be made.

4.When does your life insurance through super end? Age 65?

When you reach a certain age – typically around 65 to 70 years5 – your life insurance coverage through your super ends. It’s worth taking this point into consideration, given the fact that the average life expectancy6 or an Australian woman is now at 84.5 years and an Australian man at 80.4 years. That’s a difference of up to 15 years or more.

5.There’s a unique challenge for women and superannuation

An estimated 34.6%7 of all women have no superannuation and therefore, no insurance in super. This worrying statistic, coupled with the fact that women on average receive lower pay (when compared to men) and need to take more time out of work to raise children can make it difficult to build a reasonable amount of superannuation. This in turn, affects the amount of life insurance payable through super, which may make it difficult for your family to meet your mortgage repayments upon your death.

We may have a solution if you feel the amount of cover provided by your super isn’t enough.

ALI Group’s Loan Protection Plan provides financial support for 11 serious medical conditions such as stroke, cancer, heart attack, paralysis, and total loss of hearing/sight, cover for death and terminal illness, and more.

Want to know more?

We’ve put together a short video to help explain some of the key differences between our Loan Protection Plan and cover in your Super.

For more information about ALI Group’s Loan Protection Plan, please speak to your nearest authorised mortgage broker or if you’re ready to get a quote, please get in touch today.


2 Rice Warner. Underinsurance in Australia (2015)
4 If your superannuation trauma cover commenced before 1 July 2014; You may be exempt from the changes and still entitled to trauma cover through your super fund. If you have rolled over your cover or your fund has been updated, you may lose the exemption. Check with your existing superannuation insurance provider if you're unsure.
7 ASIC’s MoneySmart: Superannuation and Women (2015)

Loan Protection Plan is jointly issued by Hannover Life Re of Australasia Ltd ABN 37 062 395 484 (Death, Terminal Illness, Living and Accidental Injury Benefits) and QBE Insurance (Australia) Limited ABN 78 003 191 035 AFSL 239545 (Involuntary Unemployment Benefit). It is distributed by Australian Life Insurance Distribution Pty Ltd ABN 31 103 157 811 AFSG 226403 (ALI). ALI receives commission for each policy sold. Any advice provided is of a general nature only and does not take into consideration your personal objectives, financial situation or needs. You should consider the Product Disclosure Statement when deciding if this product is appropriate for you.

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