Insurance in super: what to check, and when cover can stop
Key points
- Many super funds include default death and TPD cover, and some include income protection.
- Cover can stop if your account has had no contributions or rollovers for 16 months.
- Check what you'd lose before closing or combining super accounts.
If you have super, there's a good chance you also have some insurance through it. Many funds give members default cover, usually death (life) and TPD cover, and sometimes income protection. The cost is deducted from your super balance, so it's easy to miss.
Rules that can switch cover off
Since 2019 and 2020, super law has included rules designed to stop people paying for insurance they may not want or know about:
- Inactive accounts. If your account hasn't received a contribution or rollover for 16 continuous months, your fund generally has to cancel your cover unless you've told it you want to keep it. Funds must warn you before this happens.
- Members under 25. New members under 25 generally don't get default cover unless they opt in. Exceptions apply, for example some dangerous occupations, or where an employer pays for the cover.
- Low balances. Accounts that haven't reached $6,000 since 1 November 2019 generally don't get default cover unless the member opts in.
If you want to keep cover on an account that may become inactive, contact your fund and ask how to opt in to keep it.
What to look for on your statement
- The types of cover you hold. Death, TPD and income protection are listed separately.
- The amount of each cover. For income protection, check the monthly benefit, waiting period and benefit period.
- What you've paid. Your statement shows insurance deductions for the year.
- Your death benefit nomination. Check whether you have one, whether it's binding or non-binding, and whether it's current. Some binding nominations lapse after three years.
More than one super account?
If you've changed jobs, you may have super in more than one fund, and you may be paying for insurance in each. Combining accounts can save fees, but the cover attached to an account you close usually ends when the account does.
What combining can mean for cover
Closing or combining super accounts can end the insurance attached to an account you close. Cover that ends may not be available again on the same terms, especially if your health has changed.
How default cover is set
Default cover is set by the fund for its members as a group. Your fund can tell you exactly what you hold and how it works.
This guide is general information only. It doesn't take into account your objectives, financial situation or needs. Consider the relevant PDS and TMD from the insurer before making a decision.
Read more: Insurance through super. Or ask for a quote; you’ll be contacted to prepare your quotes.
