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Top five questions about insurance inside superannuation

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It is important for fund members to understand the insurance they have inside superannuation so they can make the right choices about their cover.

1. What is insurance inside super?

A large number of superannuation funds have a built-in life insurance policy that provides cover and for many Australians, this is an affordable way to manage life insurance.

sponsored insurance through super fund

Insurance inside super is more than just death cover. Default insurance provided by super funds can include life cover, total and permanent disablement (TPD) insurance and income protection.

2. What's the difference between insurance inside super and life insurance bought through an adviser or direct from an insurer?

There is actually quite a difference. With insurance in your super, you don't have to go through the underwriting process, unless you want to change the level of insurance provided when you join the fund. The fund's trustee, not the insurer, owns the policy.

When applying for cover through an adviser or direct from an insurer, you usually have to go through underwriting, so they can offer you insurance that is more tailored to your individual needs.

3. Are there any benefits to having life insurance inside my superannuation?

Some of the key benefits of having your life insurance in your super include:

  • Insurance premiums are paid directly from your super. This means you don't need to reduce your take home pay and make another monthly insurance payment from your bank account.
  • Your fund negotiates bulk rates for members so generally premiums are lower than if you buy through an adviser or direct from an insurer.
  • By nominating a binding beneficiary you determine who gets your super and any life insurance payment in the event you pass away.

While there are advantages to having cover through a financial adviser, such as more tailored options, for many Australians, insurance inside super is an affordable way to manage life insurance.

4. Can I review and adjust my default insurance cover?

Yes, follow these steps to review and adjust your insurance cover. Depending on your situation, this can be complicated so please call your fund to discuss or clarify any aspect of insurance.

  • Check your current insurance by looking at your superannuation statement, logging on to the secure portal, or by calling them.
  • Think about what type of insurance you may need to suit your circumstances and lifestyle.
  • Calculate the amount of cover you need. This will also give you the cost of insurance which will come from your super account rather than having to pay separately.
  • Log in to the secure portal from your super fund and apply for insurance. If this isn't available then a form should be on the website or you can contact them. You'll need to answer questions relating to your health so your application can be assessed.

Once you've submitted your application you'll get confirmation of your cover or an indication of what other steps might be required.

5. How do I work out what level of insurance cover I need?

Use a calculator on your super fund's website to get guide on how much insurance cover you need. Some suggestions to consider are:

  • What is the minimum cover needed to eliminate mortgage debt?
  • Do you want to provide enough for the people left behind without worrying about bills and expenses?
  • If you are no longer able to work, how much will you need for medical treatment, home modifications and basic living expenses for the rest of your life?

Your super fund can often provide you with free financial advice to assist you calculate your insurance needs. Or for further information on insurance inside super, visit the MetLife Australia website.

The information about MetLife life insurance is general only and does not take into account your personal situation, needs or objectives.  Before deciding whether to acquire, or continuing to hold, any of our products, please read the PDS available at metlife.com.au or the insurance guide available from your super fund.  Life insurance products are issued by MetLife Insurance Limited ABN 75 004 274 882 AFSL 238096.

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Chesne Stafford is the chief customer and marketing officer for MetLife Australia. Chesne has more than 20 years' experience in distribution and relationship management roles within wealth management with a strong leadership track record, always advocating on behalf of customers.
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