Life insurance is one of the best ways to protect yourself and those you care about most.
So it’s reassuring to know that most superannuation funds offer a built-in life insurance policy – also known as insurance inside super (IIS) – to their members. For many Australians, this is a simple and affordable way to manage life insurance.
However, it’s important to regularly check the insurance cover inside your super to make sure it meets your needs.
What does Insurance Inside Super include?
Although it’s still life insurance, whether you buy it in or out of super, the insurance policy offered by your superannuation fund may include up to three distinct types of cover:
- Life (or sometimes called ‘death’) insurance, which pays a lump sum to your beneficiaries if you die;
- Total and Permanent Disability (TPD) insurance, which is for serious accidents or illness that permanently stop you from working; and
- Income Protection insurance, which provides a regular payment during prolonged illness.
Most super funds that offer IIS allow their members to choose how much of each type of cover they need.
What are the benefits of IIS?
Depending on your circumstances, IIS can be a great way to obtain cover.
IIS premiums are paid out of your superannuation account, which can be beneficial if your cash flow is limited and may offer some tax advantages over retail policies. Premiums are paid from your pre-tax income, so money isn’t taken from your savings account for this purpose.
How much cover do I need?
Whether you opt for IIS or retail cover, it’s important to think carefully about how much cover you need and to review your policy when life changes occur.
For example, young people who are renting and have no dependents may need less life insurance coverage than someone with a partner, children and a mortgage.
By contrast, younger people may need more TPD cover than older people.
Some super funds provide online calculators to help their members figure out how much cover they need.
Remember, life insurance is for those you leave behind so they don’t experience financial hardship. When choosing your coverage, some basics to consider are:
- Mortgage debt;
- Your past and current health situation;
- Cost of your children’s education;
- Time to grieve.
For TPD insurance, you may consider:
- Your potential medical treatment costs;
- Modifications to your home;
- Basic living expenses for the rest of your life.
What’s next?
Contact us at REI Super to find out whether you are currently covered. Use our Insurance Needs Calculator to understand how much cover you need. Apply to make change to increased, reduce or cancel cover.
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This article was brought to you by MetLife.
The information contained in this article is of a general nature does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super as well as the Insurance Guide and consider speaking to a licensed financial advisor before making any decisions. REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129 October 2021.