What does insurance through super cover for you

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What does insurance through super cover?

Here’s what insurance through super offers

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You may know that your super offers you insurance but understanding all of its benefits can be a really useful if you ever need to claim.

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The biggest benefit of having your insurance through super is that the premiums can be deducted from your super balance. This means you’re not paying out of pocket, which is a nice benefit. And as your super contributions are generally taxed at a lower rate than your take-home pay, you’re saving a bit more money.

On top of this, life insurance policies purchased through super are usually significantly cheaper than you’d be able to get if you went shopping for a policy on your own.

Another benefit of insurance through super is limited underwriting. In a nutshell, this means that the fund buys insurance policies in bulk and the insurance companies make assumptions about the people they will be covering. This means you probably won’t need a medical exam.

Life insurance is more than just about a payment if you die unexpectedly. There are also policies that provide an income if you’re unable to work for a period due to illness or injury or are declared permanently disabled and never able to work again.

Why is life insurance important?

While the future may seem far away, if you’re thinking about buying your first home and maybe even starting a family, reality can hit hard. Having life insurance in place before you make big life changes means you’re covered in case something unexpected occurs.

Think about it this way: If you’re about to get into a car accident, you can’t stop time to get insurance. The same goes for your life. You don’t want to wait until you have an accident that makes you miss time from work – or not be able to work at all – before you get insurance.

Just because you don’t have many responsibilities like debt today doesn’t mean you won’t tomorrow. The money from your insurance can help pay your rent or mortgage to keep a roof over your head and keep food on the table when you’re not able to provide an income. Sure, you may have a little money saved – but what happens when that’s exhausted? What if you’re sick or injured for years? What if you can never work again?

Also, your insurance isn’t just for you. Death cover, for example, can take care of things such as funeral expenses as well as provide for your loved ones and family who rely on you.

Life insurance case study

Jim is 27 years old and works as a programmer. He’d recently become engaged to Leslie and they’d been saving together for a home deposit.

In 2015, Jim was diagnosed with a brain tumour. After emergency surgery he was unable to return to work for many months while he healed and went through rehabilitation.

There was a good chance Jim would be able to return to work in the future but, in the interim, he and his fiancée were looking at an $80,000 pa shortfall in their budget.

Fortunately, Jim had insurance through the super fund that he’d started with his first job when he was 16. His claim for income protection insurance for his temporary disability was approved and he received an insurance payment of 70% of his ordinary wages for just over a year.

This allowed him to spend time focusing on getting better, reducing the financial strain on both Jim and his partner.