Is life insurance through super worth it?

happy couple getting life insurance through super

Most superannuation funds offer life insurance policies to their members automatically. But are these policies worth it for older Australians?

Life insurance pays a lump sum amount to a nominated beneficiary in the event of a person’s death.

Most standalone insurers offer some form of life insurance, but according to Moneysmart, more than 70 per cent of Australians who hold life insurance policies do so through their super fund.

Read: Insurance firms can skim your data to price your policies

There are many advantages to getting life insurance in this way. It’s more convenient, with premiums taken directly from your contributions. Life insurance through super is often cheaper than a standalone policy.

They usually don’t require medical examinations, and often also offer total and permanent disability (TPD) cover as well.

But for older Australians, you may be better off removing this automatic insurance and either buying a standalone policy with another insurer or saving your premiums.

Read: Can working from home void my insurance policy?

This is because the majority of life insurance through super cuts out at age 70. TPD cover usually ends at 65.

You’ll stop paying premiums of course, but you’ll also lose the cover. Unfortunately, if you then try tried to purchase a policy through another insurer, you’ll likely be disqualified due to your age.

Most insurance companies won’t take new life insurance customers aged 70 or over. But crucially, they will cover people over 70 who began paying premiums before that age.

Read: Don’t set and forget life insurance

Unfortunately, you will usually pay significantly more to a standalone insurer, but the peace of mind of being covered indefinitely may be worth the cost for you.

So, if you are approaching this age and intend to use life insurance to cover expenses if you die, it’s definitely worth looking into buying a standalone policy.

Even if you’re single with no dependents, if you’re approaching age 70 make sure you’re not depriving yourself of a bigger super balance paying for cover you won’t use.

Do you hold life insurance through your super fund? Is it worth it for you? Let us know in the comments section below.

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

Written by Brad Lockyer

Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.

One Comment

Leave a Reply
  1. I am with Australian Super. I have life insurance with them. I am covered as a blue collar worker which cost more in premiums. I asked if this could be changed to white collar worker as I have retired in December 2021. I was informed you cant change, the only option is to cancel.
    I have received a letter now to say that because they have not received a payment from me or my employer that after 16 months the insurance plan is cancelled.

Leave a Reply

man holding phone displaying passkey app

Apple’s PassKeys update could make traditional passwords obsolete

woman holding cup of black tea

Love your black tea? We have good news for you