Why choose insurance in your super

Life can feel too short to worry about what ifs. But by taking a few minutes to think about how you’re going to protect yourself if something does happen, you won’t have to worry.

One of the most common ways Australians are covered is with insurance inside their super. In fact, more than 70% of Australians have their life insurance policies held inside super1. This is because it’s usually offered as a part of an employer’s super plan, and there can be several benefits to that.
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It’s actually pretty common to need insurance, even at a young age. In fact, in 2018 AMP Life paid an average of $3.3million worth of insurance claims a day!2

Insurance is a choice

In the past, insurance inside super was generally provided automatically to anyone who signed up to their employer’s super plan (this is sometimes called default cover because members don’t need to answer health or lifestyle questions to get insurance).

But the rules changed on 1 April 2020, with updates to super laws. These laws aim to protect certain super accounts from being eroded by the costs of insurance that some people may not want.

As a result, to be eligible to receive automatic (default) insurance with your employer super plan these days, you must:

  • be 25 years old or over, 
  • have a balance of at least $6,000 in your super account, and 
  • not have an inactive3 super account.

In most cases, as soon as you meet these eligibility requirements, your insurance will be applied automatically (but you’ll be given the chance to tell us if you don’t want it).

How to get insurance

If you’d like insurance but aren’t yet eligible for it, there may be some good news.

  • If you tell us you’d like insurance in your super within the first 120 days of starting your job, insurance could be provided to you without requiring you to provide any health or lifestyle information4.
  • If you decide to apply for insurance after 120 days of starting your job, you may be asked to provide some health and lifestyle information. Please call us on 131 267 for the right application form.

Having insurance is an important decision, so please read the important details below. More information about the insurance provided through your plan is in your product disclosure statement or you can call us.

How insurance inside super works

Insurance inside super is usually offered through your employer’s super plan, which they’ve negotiated for you and their other employees. This is called a group insurance policy which is generally considered the number one way for Australians to access affordable insurance without needing underwriting5.

Your super account may offer:

  • Life insurance, which provides a lump-sum payment if you pass-away or become terminally ill.
  • Total and permanent disability insurance (TPD), which provides a lump-sum payment if you suffer a disability preventing you from ever working again.
  • Income protection (TSC), which provides a replacement income of up to 75% of your regular income, if you can’t work due to illness or injury.

All insurance policies require regular payments, but when you have insurance inside super, these costs are deducted from your super balance. This means your take home pay won’t be affected, but your super balance can start to reduce if regular super contributions aren’t made.

To work out whether your insurance payments may be unnecessarily reducing your balance, you can use this general rule of thumb - your insurance premium should be below 1% of your salary.

Note: This may not apply to people who require a higher amount of insurance cover to meet their needs.

Learn more about insurance inside super

Insurance needs calculator
Our insurance needs calculator can also help you estimate how much cover you may need based on your circumstances.

Important details

1 April 2020

Use this information to understand more about insurance inside super and how it is affected by super laws.

Please note: This information is general only. Please read your AMP super welcome pack or PDS, including your insurance guide fact sheet, (found online at My AMP) for specific details about the insurance provided with your super account and the eligibility rules.

Insurance inside super

What’s insurance inside super? Many super plans include insurance as part of their offer. It’s often basic cover that’s provided to a set group of people (like employees of a company) and can help members and their loved ones if something were to happen. Read more
How do I find out how much super and insurance I have? Login to My AMP using your account number. You can also find your super and insurance details in your annual statement, insurance confirmation letter, or by calling us on 1300 363 267.

Super laws for insurance inside super

Why were super law changes introduced?

The cost of insurance inside super often is paid from the super balance. Some people don’t realise they have this insurance or that they’re paying for it.

Super law changes aim to protect retirement savings from being eroded by the cost of insurance that some people may not want. 

What’s in the super laws?

The super laws were introduced in two parts:

1. The first round, called Protecting Your Super, came in on 1 July 2019, and focusses on insurance in inactive super accounts. Under these laws, super accounts which don’t receive a contribution or rollover for 16 months will have their insurance cancelled (unless the member requests to keep it). 

2. The second round, called Putting Members’ Interests First, came in on 1 April 2020. New super members who join after 1 April 2020 will only be able to receive insurance in their super account if they’re eligible (once their account balance reaches $6,000, they’re aged 25 or over and their account is not inactive), unless they request to have insurance in writing.

Also, we were required to cancel insurance for members who have a super balance which didn’t reach $6,000 by 1 April 2020 and, after 1 November 2019, they:

  • joined their employer; or
  • increased their insurance,

unless, they told us in writing that they wanted their insurance.

Rules about insurance in super

How do I know if I’m eligible for automatic insurance in my super?

In the past, where super plans included insurance (especially plans negotiated by employers for their employees), insurance was usually automatically provided to everyone who signed up.

Now, there are changes to government rules around who can receive it automatically. Generally, you’re eligible for insurance if you:

1) tell us you want to receive insurance in your super via our insurance request form.
2) you’re aged 25 or over,
3) your account balance has reached $6,000 at some point, and
4) you meet the other eligibility criteria outlined in your insurance guide fact sheet.

Note: You won’t be eligible for cover if your account is inactive – i.e. it doesn’t receive contributions or rollovers for 16 months.

When you do become eligible for insurance (aged 25, have had at least $6,000 super balance and your account is not inactive), we’ll let you know that insurance has been applied to your account.

What if my employer pays for my insurance?

If your employer funds 100% of your insurance premiums for your insurance and they notify us of this, you will receive automatic cover regardless of your eligibility.

If your employer pays for some of your insurance premiums only, you may not be eligible for insurance, unless you request to have it. Please check your insurance guide fact sheet.

What if I want insurance but I’m not eligible to receive it automatically?

If you joined your employer’s super plan and you request insurance via the election form provided within the first 120 days of joining, you won’t need to answer questions about your health and lifestyle and you will ‘automatically’ receive insurance cover (subject to terms and conditions).

You can apply for insurance cover after 120 days, by filling in the application form provided with your super plan; you may need to answer questions about your health and lifestyle though. Your insurance will start once the application is accepted by the insurer.

Insurance cancellation

What if my insurance is cancelled, can I get it back?

If you do get insurance but don’t contribute to your super account for 16 months, your insurance may be cancelled.

If this happens, you may be able to reinstate your cover. Alternatively, you may be asked to apply for new cover and provide health information, which will be assessed as part of your application.

It may not be possible to reinstate your insurance on the same terms or at the same price. And, in some circumstances, you may not be able to reinstate your cover at all.

It can be complicated for certain people to get insurance cover. For example, if you have a pre-existing medical condition or work in a dangerous occupation. Learn more.

What if I decide to cancel my insurance later on?

If you wish to cancel some or all of your insurance, let us know on 1300 363 267.

What else do I need to know?

How do I know what’s right for me?

If you do get insurance, it’s important to understand it, to know what’s right for you. Here are some things to think about:
  • It can be complicated for certain people to get insurance. Eg, if you have a pre-existing medical condition and your insurance is cancelled, you may not be able to reinstate your cover to the same benefit level or get insurance elsewhere at the same cost.
  • Product features like waiting or benefit periods can also vary between policies. Please check your most recent statement or product disclosure statement.
  • Payments for insurance inside super come out of your super balance, which means the balance can be reduced by costs over time. This is especially important when an account is inactive or has a low balance. This could reduce the amount of money available for you in retirement.
  • Make sure you understand the details of insurance inside super at amp.com.au/iis.
  • Some employers negotiate special deals for their employees, which you could be benefiting from.
  • You can get an idea for what your insurance needs might be by using our insurance calculator.
  • A financial adviser can help you determine what insurance is right for your circumstances.

What impact does insurance have on my super?

If you get insurance inside your super, you need to keep in mind that your insurance premiums will be paid from your account which can reduce (or erode) your super balance over time. While insurance cover provides an important benefit to many members, you can use this guide to work out whether your cover is appropriate.

Generally, if your insurance premium is more than 1% of your salary, this may inappropriately reduce your super balance. Please note that this guide may not apply to certain groups of members who require a higher amount of insurance cover to meet their needs.

To find out more about what insurance is right for you, please visit our insurance inside super webpage or contact your financial adviser.

Where can I get more information?

How do I get in touch?

Call us with any questions about the super changes on 1300 363 267. Or, email us at askamp@amp.com.au.

Where can I find more information about the super laws?

We encourage you to visit these independent sites to help you better understand insurance inside super and the new laws:

  • The Australian Securities and Investment Commission (ASIC) offers helpful information via its website moneysmart.gov.au

You can also learn about super reforms at amp.com.au/superchanges

Also consider talking to a financial adviser to discuss your insurance needs and what’s best for you.

Case Study

Please note: These examples are made up, and everyone’s circumstances are different. Please consider your individual circumstances before deciding whether insurance inside super is right for you. 

Phil and Emily got a new job

Phil and Emily are good mates. They’re both 19 and started their new job at the local department store in the same week. They rent an apartment together with two other people, while studying.
They joined their employer’s super plan, which included Life insurance, TPD and TSC insurance as part of the plan.

However, because they were under 25 with a super balance below $6,000, neither were eligible for automatic insurance, unless they asked for it.

Phil decided he wanted to sign up for the insurance inside super, and Emily decided not to take it.

Phil’s journey

Phil understood that the monthly cost of the insurance would come out of his super. Fortunately, Phil didn’t really feel the cost of this in his daily life, because the payments weren’t coming out of his take-home pay. But it did affect the speed at which his super grew, because the insurance payments were covered by his super contributions.

Two years into working at the department store, Phil and Emily went on a ski trip and Phil shattered his thigh bone. Fortunately, because Phil had TSC insurance, Phil was able to claim 75% of his salary, after a waiting period, while he recovered and could still afford to pay rent and keep studying.

Emily’s journey

Unlike Phil, Emily decided not to take insurance in her super. She was keen to grow her super balance as fast as possible while she was young (Emily was a big believer in the power of compound interest, and understood that the more money she invested into her super early, the bigger it might grow).

When Emily saw Phil’s accident on the ski slopes, and how insurance helped him during recovery, she reviewed her insurance needs. In that time, she also found out about a health condition she had, and since she was no longer eligible for automatic cover, she would have to go through a series of health and lifestyle questions before receiving insurance. She found out that if her insurance application was accepted, her pre-existing condition may not be covered.

Instead, Emily decided to put money aside for a rainy day. As it turned out, she was glad she did. When Emily turned 25, her super balance was well over $6,000 and she automatically became eligible to receive the full cover of insurance in her super. This is because the terms and conditions of her particular plan, allowed her pre-existing condition to be fully covered, after she performed her normal role, full-time for 30 days.

Phil and Emily’s insurance choices

We're committed to the Insurance in Super Voluntary Code of Practice (the Code).

You can learn more, and access the full Code on ASFA's website.

1 ASIC Moneysmart website. How life insurance works. https://moneysmart.gov.au/how-life-insurance-works/insurance-through-super
2 Figures based on AMP claims paid during 2018.
3 An inactive account is a super account that has not received any contributions or rollovers for 16 months. Learn more at https://www.amp.com.au/insights/grow-my-wealth/protect-your-super-package
4 Subject to terms and conditions.
5 ‘Fiscal Impacts of Removing Insurance in Superannuation' Rice Warner 2018

Important information

Products in the Super Directions Fund and the Wealth Personal Superannuation and Pension Fund are issued by N.M. Superannuation Proprietary Limited (N.M. Super) ABN 31 008 428 322 (trustee), which is part of the AMP group (AMP). Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP at amp.com.au or by calling 131 267. Read AMP’s Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.

Products in the AMP Eligible Rollover Fund, National Mutual Retirement Fund, and NM Pro Super Fund are issued by Equity Trustees Superannuation Limited ABN 50 055 641 757 (trustee). Risk products are issued by AMP Life Limited ABN 84 079 300 379 (AMP Life), which is part of the Resolution Life group. AMP Life has proudly served customers in Australia since 1849. AMP Limited ABN 49 079 354 519 has sold AMP Life to the Resolution Life group whilst retaining a minority economic interest. AMP Limited has no day-to-day involvement in the management of AMP Life whose products and services are not affiliated with or guaranteed by AMP Limited. AMP Limited is not liable for products issued by AMP Life or any statements or representations made in the PDS for those products. “AMP”, “AMP Life” and any other AMP trademarks are used by AMP Life under licence from AMP Limited. Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP Life at amp.com.au or by calling 133 731. Read AMP Life’s Financial Services Guide for information about our services, including the fees and other benefits that AMP Life and/or other companies within the Resolution Life group may receive in relation to products and services provided to you.

Any advice and information provided is general in nature, hasn’t taken your circumstances into account, and is provided by AWM Services Pty Ltd ABN 15 139 353 496 (AWM Services), which is part of the AMP group (AMP). All information on this website is subject to change without notice.