Rising Tide Blog

What you need to know about insurance in Super

Posted by Matt Hale

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Though often overlooked, your Superannuation fund can be a great way to save on insurance – but it’s important to understand what you’re getting into before signing up. While there are some excellent advantages of taking out insurance through your Super fund, there are also some drawbacks to be aware of.

Here’s what you need to know to help determine whether insurance in Super could be the right option for you.

Coverage may not be specific to your needs

In most instances, insurance offered through Super funds will be of a general nature and will not be specific to your individual needs. While it depends on your individual policy, Super funds typically offer coverage for death, total permanent disability (TPD) and income protection, with options to increase or decrease coverage on request. For those who require coverage of a more specific nature, the options available through your Super fund may be quite restrictive.

Health checks are not required

Another important thing to note is that health checks are usually not required when taking out insurance through Super. In most cases, everyone who applies receives the same level of coverage, for the same premium – regardless of lifestyle factors or any existing injury or illness. This brings us to our next point…

You may not be getting the best value for money

If you’re a fit and healthy person, it’s likely that you will be charged the same premium as someone with a whole raft of health issues, and it’s quite unlikely that you’ll be getting the best bang for your buck. Remember, Super funds offer insurance coverage as a convenient extra, so they rarely see the need to compete on price in the same way that a standalone insurance provider might.

Some coverage is better than no coverage

With that in mind, some form of insurance is always better than none. While it may not be the best long-term solution, insurance in Super could be an option well worth considering, particularly if cash flow is a concern. Unlike other policies, insurance through Super requires no out-of-pocket payment, and is instead automatically deducted from your Super earnings. However, it’s important to realise that these premiums may eat up a portion of your retirement savings, which could add up to quite a substantial amount.

Understand what you’re covered for

If you’re currently signed up for insurance through your Super fund, take the time to review your policy and make sure that you’re crystal clear on what you’re covered for. Do some research, find out if your current policy meets your needs, and consider whether it’s really worth the premiums you’re being charged.

You can have the best of both worlds

Another option to be aware of is that you can actually arrange a personalised insurance product through your Super fund, meaning that you get the advantage of a comprehensive insurance policy as well as the added cash flow benefits. To do so, you will need to pay for a personally underwritten policy, however this one-off expense will more than pay for itself when you consider the savings you’ll stand to make over the years. For the best outcome, it’s important to work with an experienced insurance broker who will be able to support you with all of the medical criteria and ensure that your new policy will be perfect for your needs.

Get in touch with an expert

Finding the right insurance policy can be challenging, especially if you’re unsure where to start. For guidance on how to find the right policy for your individual circumstances, call (03) 9600 2124 to schedule an appointment with one of Rising Tide Financial Services’ friendly financial advisers.