Retirement
Should I put insurance inside or outside of super?
Most superannuation funds now offer life insurance for their members, but is it worth paying premiums out of your super for it? Here’s what to consider.
Should I put insurance inside or outside of super?
Most superannuation funds now offer life insurance for their members, but is it worth paying premiums out of your super for it? Here’s what to consider.

If you’re reviewing your life insurance, check what cover you have through your super fund so you can compare it with other options. Like all insurance policies, when you have insurance inside super you will pay insurance premiums. However, if your insurance is through your super fund, the premiums are deducted from your super account balance, rather than being paid out of your household budget. But is putting insurance into super a good idea? As with anything, there are pros and cons, and we’ve compiled a list of the major considerations for you.
You can be covered even if you can’t afford it
If money is tight, putting insurance inside of super will help your cash flow. We have 9.5 per cent of our income going into super that we can’t touch, so it’s a good source of funds to pay for insurance when you otherwise can’t afford it. However, keep in mind that the insurance premiums will be eroding your retirement savings, so if possible, put a little more into your super to cover for it.
It may cost you less

It’s often cheaper to have insurance inside of super because super funds purchase insurance policies in bulk and can pass the savings on to members. Be careful though, not all insurance policies are the same and just because it’s cheaper doesn’t mean it’s better.
It can be more tax effective
Term Life and Total and Permanent Disablement (TPD) insurance is typically not tax deductible. However, your super fund can claim a tax deduction on these insurances. Furthermore, the money in your super fund is contributed before tax. This means you received a tax deduction for this money in the first place, so you’re really using pre-tax dollars to pay for your insurance. However, keep in mind that insurance payouts from a super fund to your family may be taxable, and it’s also important to ensure that you’ve sorted out who your super beneficiary is.
You may get cover without a health check
Some super funds will allow automatic acceptance of a member to their insurance policy without being medically underwritten. The means they’re not going to ask you about your medical history which can make a massive difference if you have pre-existing medical conditions. Before you get too excited though, note there is usually a limit to how much insurance you can automatically get.
You might not get paid out
It’s possible that your super fund will be paid upon an insurable event, however it’s not guaranteed that your super fund will pay that money out to you. You must reach a condition of release, such as permanent or temporary incapacity, in addition to the insurance policy definitions. If you don’t meet a condition of superannuation release, the money will remain in your super fund and won’t be able to provide the financial support you may need during a difficult period.
Brenton Tong, director, Financial Spectrum

Superannuation
Australia's super performance test transforms investing: What's the next move?
APRA’s latest performance test has done more than name and shame lagging super options; it has rewired investment strategy, compressed fees and accelerated consolidation across the $3Read more

Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more

Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more

Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more

Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more

Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more

Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more

Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more

Superannuation
Australia's super performance test transforms investing: What's the next move?
APRA’s latest performance test has done more than name and shame lagging super options; it has rewired investment strategy, compressed fees and accelerated consolidation across the $3Read more

Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more

Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more

Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more

Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more

Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more

Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more

Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more