Around 40% of working Australians claim they don’t have life insurance1. Yet, with 13.5 million insurance policies inside super2, it’s likely many people may have life insurance without knowing it3.
The bigger picture
There’s a good chance, at some point in your career, you joined your employer’s default super plan – this is the plan your employer pays super into if you don’t nominate your own. Perhaps it was the easiest option for you when completing all your paperwork, or maybe it was the better deal.
Many employer default super plans also include insurance - something people may not realise they’re paying for. What’s more, many people are disengaged with their super, or are unaware of the ins and outs of the fund they’re in. This means they may have multiple accounts, which usually means paying multiple sets of fees for super and insurances that mightn’t be right for them.
So, what’s insurance inside super?
It’s insurance you pay for via your super account. There are different types of insurance offered in this way, including life insurance (or death cover), total and permanent disablement (TPD) cover, and temporary salary continuance (TSC) (also known as income protection). Learn more
Insurance is important, but it’s equally important to make sure the type and level of insurance you’re paying for suits your needs and circumstances. Learn more
To explore how much insurance you might need, use our insurance calculator or speak to a financial adviser.
About the super laws
The federal government has introduced super laws to help prevent super balances from being reduced by fees and insurance costs for cover that people may not want or need. Particularly, for:
- young members
- low account balances
- super accounts that haven’t had a contribution for a long time.
Insurance is now a choice
In the past, insurance inside super was often provided automatically to anyone who signed up to their employer’s super plan. But this changed on 1 April 2020 with the updates to super laws. Find out more.
These days, if you
- have an account balance below $6,000,
- are under 25 years old, or
- haven’t made a contribution or rollover into your account for 16 months,
you won’t get insurance applied automatically until you reach these eligibility requirements.
Unless you request insurance in the first 120 days of starting your job. Find out more.
Super funds are also required to cancel the insurance inside your super account if it hasn’t received a contribution or rollover for 16 months. We’ll let you know if this might happen to you and give you ways to keep it.
If the insurance inside your super account is cancelled because of these laws, we must transfer the account to the Australian Tax Office (ATO) if the balance is below $6,000. Some exceptions apply. Find out more.
A checklist for what you can do
Your super savings are important, and so is insurance. Here are some steps you can take to understand your super and insurance better and make sure it’s working for you.
1. Check what you’ve got – have a look at your current super and insurance. Check the balance and how much you’re paying. If you have an AMP account, you can check the details in My AMP.
2. Find out if you have multiple super accounts – if you’re not sure whether you have other super accounts, an online search is a good way to find out. If you do find more super, you may want to consider consolidating it into a single account to make it easier to manage and possibly save on fees.
3. Before consolidating - check whether you have any insurance double ups – if you have more than one super account with the same type of insurance, you may be paying for more insurance than you need.
Something to note on your TSC insurance, you’ll most likely only be able to claim up to 75% of your pre-disability income4, regardless of whether you have TSC cover within multiple super accounts.
Before you cancel your insurance or consolidate your accounts, carefully consider the features, benefits and costs for each. You can also talk to an adviser to make sure you’re making the right decision for you. Keep in mind that it can be difficult to reinstate insurance that’s cancelled.
4. Work out how much you need and what fits your lifestyle – it’s a good idea to speak to a financial adviser about this to make sure your personal circumstances are taken into account.
5. If you’ve heard your insurance might be cancelled – respond to your super fund accordingly if you want to keep it. Make sure you’re also across how the insurance cancellation will affect you and your loved ones before you decide.
6. Keep on top of it – life changes, which means our insurance needs change too. It’s a good idea to review your insurance needs alongside other major life changes like getting a new job, moving to a new house, or having kids. That way, your insurance can keep up with your life.
1 Insurance through superannuation, research 2016. Rice Warner
2 Insurance through superannuation, research 2016. Rice Warner
3 Metlife Insurance Inside Super Report 2018, page 10
4 If you receive income from another source, like WorkCover, this will be offset against the 75% pre-disability income
Understand how to cancel insurancePMIF, the more recent law are designed to protect low balance super accounts from premiums for insurance that people may not want or need. Find out more about how to keep or cancel insurance inside your super here. Read more
Understanding insurance in your superMany super funds include insurance as part of their offer. While you may already have insurance inside super, you should make sure that it’s enough cover & it’s the right type to help protect you & your loved ones. Read more
Super and pension changes in 2021Find out about recent and upcoming legislative changes that could affect you. Read more
All statements about insurance cover are general comments only and the specific terms and conditions of the relevant cover will need to be considered in the event of any claim.
Any advice on this page is general in nature and is provided by AMP Superannuation Limited ABN 31 008 414 104 AFSL no 233060 and N.M. Superannuation Proprietary Limited ABN 31 008 428 322 AFSL no 234654. The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on the advice, you should consider the appropriateness of the advice, having regard to those matters. Before making a decision about the product, you should consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling 13 30 30, before deciding what’s right for you.
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