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Does your super fund provide enough life insurance cover?


According to research by - 50% of Industry Super Fund members are under-insured by $100,000 for life insurance. While insurance through super can be cheaper and have certain tax advantages, many funds only provide the basic level of cover, which may not necessarily reflect your individual circumstances.

Types of insurance:

Super funds generally provide three types of insurance:

  • Life Insurance - which can help provide for your loved ones if you die.
  • Total & Permanent Disability Insurance (TPD) - which can replace your income if you are injured and can’t ever work again.
  • Income Protection Insurance - which can pay you a percentage of your salary if an injury or illness results in you not working for a period of time.

Each fund offers different types and different amounts of cover, and each has its own set of limitations and terms and conditions.

How much cover do I need?
Working out how much life insurance cover you require will be based on your individual circumstances. While there is no magic formula, recent research by Rice Warner shows that the average Australian couple aged 40 with children, requires life insurance approximately 10 times their annual earnings, simply to repay debts and maintain their current living standards.

To determine how much cover you need, start by asking yourself the following questions:

  • How much money will my family require to cover household expenses and immediate bills such as funeral expenses?
  • How much money will my family require to pay off all debts – including credit cards and mortgage?
  • What lifestyle aspirations do I have for my family and what support do I want to provide for my dependents?

If the sum of these figures outweighs your superannuation fund’s cover, you might need to consider increasing the level of insurance within your super fund, or take out a separate policy with higher benefit levels outside of your superannuation fund.

Choosing life insurance is an important decision and there are many solutions available. YML Financial Planning can help you review your current insurance, assess your requirements and find the right cover for your situation, so you can rest assured that your family will be secure.