Understand the three common types of cover
Life cover pays a benefit if you die and may include terminal illness. Total and permanent disability cover may pay if you meet the policy definition of permanent disablement. Income protection can replace part of your income for a limited benefit period after a waiting period. Each definition matters more than the product name.
Cover through super can be convenient and group pricing may be competitive, but premiums are deducted from retirement savings. Some benefits paid through super can also face release or tax rules before money reaches you or a beneficiary. Read both the insurance policy and the fund’s benefit-payment process.
Work out how much cover is useful
Start with the financial problem the policy would need to solve. For life cover, consider debts, funeral costs, future household spending, childcare and the income survivors would lose, then subtract assets and other insurance. For disability and income protection, consider living costs, treatment, time off work and any employer leave entitlements.
Default amounts are designed for groups, not your household. They may be too low for someone with dependants or more than a person with no debts needs. Revisit the calculation after a mortgage, child, separation, substantial pay change or health event.
Check eligibility before changing anything
Default insurance is generally restricted for new members under 25 and for accounts below $6,000 unless an exception applies or the member opts in. Inactive accounts can also lose cover. Confirm what you actually hold, when it started and which occupation category applies.
If you are comparing replacement cover, disclose information accurately and wait for written acceptance and a start date before cancelling the old policy. A later health issue, hazardous occupation or exclusion can make old cover impossible to recreate. When consolidating super, treat insurance as a separate decision rather than an afterthought.
Quick reference
Key things to remember
- Premiums come from your super balance.
- Default cover may be limited by age, account activity or balance rules.
- Occupation categories can affect price and claim outcomes.
- Cover can end when you consolidate or close an account.
Put it into practice
Your next steps
- 01
List every policy you hold inside and outside super.
- 02
Compare cover amounts with debts, dependants and income needs.
- 03
Read exclusions, waiting periods and definitions.
- 04
Confirm new cover is active before cancelling old cover.
Go deeper
Guides in this topic
Check the source
Official information
Super and tax rules change. These primary sources are the right place to verify the details before you act.