Life Insurance in Superannuation
Many Australians feel their life insurance needs are met by their superannuation fund policy, as many as 83%1 of super members sign up for the default life insurance cover offered by their super fund. This may seem like a convenient option for some, however there are several things that all consumers should keep in mind when considering life insurance.
Often default life insurance provided within a super fund may only offer $100,000 or $200,000 worth of cover 2. A 2008 survey by the Australian Institute of Superannuation Trustees (AIST) and Industry Funds Forum (IFF) revealed that 'one in two industry fund members were underinsured by $100,000 or more'.
Consumers are advised to check their super fund(s) to see what level of cover they have in place. Would it be enough to protect their families if the worst were to happen? Would it cover the mortgage, household bills, car repayments, groceries and other daily expenses?
A separate or additional life insurance policy can offer your family additional protection if the worst should happen, meaning that you can have peace of mind knowing your family will be looked after well into the future. Many direct life providers now offer levels of cover up to $1.5 Million (depending on your age).
It's also worth considering what types of insurance are available inside superannuation arrangements as some may only be available outside of superannuation. A good example would be Critical Illness or Trauma Insurance. This type of insurance cover provides a lump sum payout if you are diagnosed with a specific critical illness, such as cancer or a heart attack, which can have a significant impact on you and your family in the form of medical costs or the inability to continue to work whilst undergoing treatment.
Ultimately life insurance is invaluable as it can assist you or your family at a time when you or your family at a time when you need financial assistance the most.
Consumers are advised to review their life insurance policies and understand what they are covered for. Making sure you have the right cover will ensure that your family will be taken care of when they need it most.
The insurance is issued by Allianz Australia Life Insurance Limited ABN 27 076 033 782, AFSL 296559. The information contained on this website is general information only. It does not take into account your individual objectives or financial situation. You should therefore consider the appropriateness of the insurance having regard to your objectives, financial situation and needs. Prior to making any decision you should read the Allianz Life Plan Product Disclosure Statement and Policy Document (PDS). You should seek advice from your financial adviser before deciding on appropriate insurance cover.