BENEFITS OF INSURANCE IN SUPER
There are good reasons to hold insurance in your super.
Your premiums are automatically deducted from your super rather than out of your salary or wages. This can make it easier to manage your cash flow.
If you’re in a default super arrangement, like FirstChoice Employer Super:
- You don’t have to undertake medical assessments to get cover – unless you want to increase the amount you’re covered for.
- Your premium will generally be lower than what you would pay for an individual policy, because your super fund is able to negotiate lower (group) rates with the insurer.
HOW THIS IMPACTS YOUR SUPER
Insurance premiums are deducted from your super account each month. So if these payments aren’t offset by regular super contributions or rollovers, it will reduce your account balance.
You may wish to make additional contributions to your super as salary-sacrifice payments. That way, you can take advantage of the benefits of holding insurance in super and cover the cost of your premiums without eating into your retirement savings. Please note that contribution caps apply.
Of course, insurance in super isn’t right for everyone – you may have default cover, meaning that it hasn’t been tailored specifically with you or your situation in mind. Have you considered what insurance you need? So you may have more cover than you need which you can change, or not enough and to be fully covered, you may also need to get more insurance either inside or outside of your super fund, depending on your circumstances. So it’s a good idea to research, see what tools are available and speak to your financial adviser about what’s right for you.
CHANGING NEEDS = CHANGING COVER
Throughout your life, your insurance needs will change. For example, you may start a family – or your children may become independent and leave home. You may begin or end a relationship, buy a new house, get a new job, or retire. All of these events can make a difference to how much insurance cover you need.
That’s why it’s important to regularly check that you have the right type and amount of insurance cover.
TYPES OF COVER
Insurance in Super is designed to protect you and your family if you pass away, become disabled or are unable to work due to illness or injury. You can choose the type of insurance that best suits your needs and budget:
- Death cover (includes terminal illness): provides a lump sum benefit to you or your family if you die or are diagnosed with a terminal illness.
- Total and Permanent Disablement (TPD) cover: can provide a lump sum benefit if you become totally and permanently disabled.
- Salary Continuance Insurance Cover (SCI) (also known as income protection): can provide a regular monthly payment of up to a maximum of 75% of your regular salary if you are unable to work due to illness or injury. The benefit is based on your usual monthly income immediately before your disability. It is paid to you
- while you continue to be disabled (after the selected waiting period)
- until you reach the end of your agreed benefit period, or
- until another event occurs that ends your cover (eg death)
For more detailed information on eligibility criteria and life events
You can read more about insurance super accounts here.
Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (Colonial First State) is the issuer of FirstChoice Personal Super, FirstChoice Wholesale Personal Super, FirstChoice Pension, FirstChoice Wholesale Pension, FirstChoice Employer Super offered from the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557. It also issues interests in the Rollover & Superannuation Fund (ROSCO) offered from the Colonial First State Rollover & Superannuation Fund ABN 88 854 638 840. This document may include general advice but does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. The PDS and FSG can be obtained from or by calling us on 13 13 36.
Colonial First State is a wholly owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124, AFSL 234945 (the Bank). The Bank and its subsidiaries do not guarantee the performance of FirstChoice or the repayment of capital by FirstChoice.
The insurance provider is The Colonial Mutual Life Assurance Society Limited (CMLA) ABN 12 004 021 809, trading as CommInsure. CMLA is a non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFS Licence 234945 (‘the Bank’). The Bank has agreed to sell CMLA to AIA Group (AIA). This transaction is subject to certain conditions and regulatory approvals and is now expected to be completed in the second half of 2019.