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Life insurance through a superfund

life insurance superannuation

Our guidance is general and does not take into account your personal situation. Always consider your own situation and whether the guidance we provide is relevant to you before relying on. If in doubt, seek professional advice.

It’s an important decision to make, whether to buy your life insurance through your superfund or not.

Many Australians have life insurance sourced through a superannuation fund, however the vast majority of these people and they assume this will provide enough have inadequate cover for their needs. You can’t ‘set and forget’ your life insurance cover without risking underinsurance.

If you need more life insurance, you might be able to access it through your super fund - so it is worth checking this. But if you can’t you might need to buy an extra policy to meet your needs.

To know what you want to do, first you’re going to need to work out how much cover - our life insurance calculator can give a basic calculation as starting point and then you can see whether your super fund will offer the full amount.

Don't put all your eggs in one basket, make sure you review life insurance through a superfund versus a separate life policy held outside the fund before you decide which option is best for you.


What’s good about life insurance through a superfund?

  • It can be cheaper as superfunds buy policies in bulk
  • You may not need a medical examination to take out the insurance in the first place unlike an independent life insurer
  • It may have tax advantages as premiums are taken from your superfund, not your after taxable income
  • It’s easy to manage as your premiums are taken out of your superannuation automatically and does not affect your income or cash flow

What’s not so good about life insurance through a superfund?

  • You may not get enough cover for your needs - superfunds tend to have a standard amount they offer or they might work it out based on multiplying your salary. This is a generalisation of cover that will not be right for each individual’s needs
  • The payouts through a super fund can often take longer than directly from an independent insurance provider, due to the fact that super funds need to source the monies from the superannuation trustee who in turn claims as the life insurer
  • As your premiums are taken out of your super, you are reducing the amount of money you will have in retirement
  • There are less options available to you, superfunds only tend to offer life insurance, TPD and income protection
  • Tax may be payable on some benefits
  • Your life insurance might not go to the person you want it to. You will need to do a binding beneficiary nomination every four years. If you fail to do this the proceeds could be paid to someone else.

So what should I do?

You should firstly decide whether the cover that you have under your superfund is enough taking into account your personal circumstances. If you decide that the cover is not enough, you may decide to increase the amount under your superfund, or purchase additional life insurance through an insurer.

Independent insurance providers have life insurance policies that can offer different options and conditions to accompany a policy through a super fund. Due to their broader coverage, independent insurance providers can often tailor a policy to an individual’s needs and wants. compares 11 of Australia’s life insurance companies that have different policies to suits all your family’s needs and budget.

Compare life insurance quotes today to find the right policy for you and your family.