Life insurance through super
There are two options available when you choose to take out life insurance. You can either get it from a specialist provider or through your superannuation fund. We explain both options’ pros and cons in our guide to life insurance through super.
Generally, getting life insurance through your super fund is a simpler process, with some funds providing automatic cover when you become a member of the fund and meet their eligibility requirements. In exchange, you may have a lower level of cover and less flexibility in your cover options. Keep in mind that the premiums for life insurance through your super fund are deducted from your super account, which could reduce your total retirement savings.
Income protection through super
You may also be able to take out income protection through your superannuation fund. However, your premiums will no longer be tax deductible if you do. Our guide provides more information about getting income protection through your super fund.
What affects your life insurance premiums?
Life insurance premiums can vary, depending on the type of cover, and the insurance provider. Similar to other kinds of insurance, your premiums are usually specific to your circumstances (e.g. age and health).
Some important factors to consider when calculating the average cost of life insurance are:
- Type of cover: The more comprehensive your level of cover is, the more your premiums will cost.
- Health and lifestyle: Your health and lifestyle are major contributing factors to the price of your premiums. People in poor health usually attract higher life insurance costs than those who are healthier. Other factors include smoking and alcohol consumption.
- Occupation: If you work in an occupation where you’re faced with regular dangers and hazards like the operation of heavy machinery and drilling equipment, you may end up paying a higher premium.
- Age: Your age may contribute to the cost of your premium due to the likelihood of needing to claim sooner than younger people.
- Policy features: Extra cover, special conditions and optional features may add to the cost of your premium.
- Sum insured or benefit amount: The amount of money your insurer will have to pay out once you claim will impact your premium’s price.
Life insurance exclusions to look out for
Similar to other insurance policies, it’s important to acknowledge and understand the exclusions and restrictions on your level of cover. Most insurers have general exclusions in place for every type of life insurance cover they offer. These default exclusions or restrictions form part of their policies regardless of your medical history, financial circumstances, health and wellbeing.
Some common general exclusions include:
- Criminal activity/breaking the law: Injuries and death as a result of engaging in criminal or illegal activity can void your cover.
- Suicide or self-harm: Many insurers have specific clauses in their policies that withhold paid benefits in claims involving suicide or attempted suicide within the first 13 months of taking out cover. Some insurers may offer reimbursements for any premiums instead of paying out the death benefit. Depending on your insurer and your policy’s terms and conditions, a death benefit may not be paid within this timeframe.
- Negligent or reckless behaviour: Any injury or death caused by irresponsible, negligent or reckless behaviour may not be covered, with most insurers specifying these exclusions in their policy’s clauses. Examples include deliberate unsafe motor vehicle use, failure to acknowledge warnings, or not taking necessary safety precautions. Some insurers’ definitions of negligent or reckless behaviour may differ, but they are generally deemed as activities or incidents that any reasonable person would not undertake.
Although most insurers will cover applicants for pre-existing conditions, high-risk activities or jobs and occupational hazards, some insurers may have them listed as specific exclusions on their policies. You must read the fine print of your policy’s product disclosure statement (PDS) to ensure you’re fully aware of your exclusions and restrictions.
If you have a pre-existing medical condition, disclosing any information about your medical circumstances to your insurer is best . Some common pre-existing conditions may include asthma, depression, heart conditions, and cancer. It’s important to be honest when disclosing any pre-existing conditions you have with your insurer, as it may affect your ability to claim in the future.