4 changes that could impact insurance via Super

Four changes that may inadvertently impact the level of cover provided by life insurance purchased through Superannuation.

Many Australians choose to buy their life insurance through Superannuation.

Doing so could help with affordability and provide a guaranteed level of cover but it's a compromise solution, as we've discussed in this previous TAL blog – Is Life Insurance through Super enough?

It's also important to note that seemingly innocuous life events may impact the level of cover provided by life insurance purchased through Superannuation.

Here are four changes to beware of.

1. Consolidating your Super funds

Rolling all your Super into the one fund can be a wise move – it may save you administration fees, reduce your paperwork and make it easier to keep track of that retirement nest egg.

Commonly, people will look at exit fees and investment performance when deciding where to consolidate their Super, but it's also important to consider the impact of consolidation on life insurance coverage.

That's because life insurance can be discontinued when you move funds, and not all funds offer a level of coverage that may be appropriate for you and your family.

If you wish to consolidate funds, in addition to other personal considerations, consider the life insurance, total permanent disability insurance and income protection insurance options available in the chosen fund. 

2. Changes in personal relationships

If you experience a major change in your personal relationships, it could impact your insurance arrangements. Depending on your circumstances, it may be appropriate to update the details of your insurance beneficiaries with your Super fund.

If you would like to know when an appropriate time might be to review your level of life insurance cover provided through your Super fund - see our previous TAL blog.

3. Reaching age 65

Before you hit this milestone you may wish to take a look at what life insurance your Super fund offers beyond the age of 65.

Many super funds stop providing life insurance when members reach a certain age (usually 65 or 70).

Having said that, there are policies available outside superannuation, like TAL Life Insurance, that may help you stay protected for longer.

4. Withdrawing Super

There are circumstances under which you can access your Super early, including compassionate grounds, terminal medical conditions and severe financial hardship.

But it's important to consider that if you withdraw a large amount of Superannuation from your fund, your life insurance coverage may be adversely impacted or discontinued altogether.

Alternatives

There are alternatives to purchasing insurance through your super. These include purchasing insurance directly from the insurance provider or by talking to a financial adviser who can give you a personalised recommendation based on your circumstances and needs. You can find a nearby financial adviser here.

If you choose to purchase directly through an insurance provider you can purchase a standalone policy, like TAL Life Insurance. To construct a policy that suits you and your loved ones, you can head to our Cover Builder tool.

THE INFORMATION PROVIDED ON THIS WEBSITE IS GENERAL ADVICE ONLY AND DOES NOT TAKE INTO ACCOUNT YOUR INDIVIDUAL NEEDS, OBJECTIVES OR FINANCIAL SITUATION. YOU SHOULD READ THE RELEVANT PRODUCT DISCLOSURE STATEMENT (PDS) AND  FINANCIAL SERVICES GUIDE (FSG) BEFORE MAKING A DECISION TO PURCHASE OR CONTINUE TO HOLD A PRODUCT. LIFE INSURANCE ISSUED BY TAL LIFE LIMITED ABN 70 050 109 450 AFSL 237848.