Advantages of getting LIFE insurance through FIRST super

There are often advantages of getting life insurance through First Super.

It’s often cheaper because super funds purchase insurance policies in bulk, the Australian Securities and Investments Commission (ASIC) Money Smart suggests.

There may be a tax advantage because the premiums are paid from your super account, not your after-tax income. You can get the cover you need for you and your family, even if money is tight. It’s easy to manage because premiums are automatically deducted. And some funds automatically accept you for cover without requiring a health check. Super funds typically have three types of insurance for members:

• Death cover (also known as life insurance) – Your beneficiaries receive a benefit if you die.
• Total and permanent disability (TPD) cover – You receive a benefit if you become totally and permanently disabled and are unlikely to ever work again.
• Income protection (IP) cover – You receive an income stream for a specified period if you can’t work due to temporary disability or illness.

Depending on your age, you may choose to increase, decrease, or cancel your default insurance cover. Life insurance benefits are paid as either a lump sum or an income stream.

ASIC cautions insurance premiums through super still cost money. Consider topping up your super so your nest egg continues to grow over time.

However, you also need to be aware that:

• The types of insurance available are limited
• The level of cover may be limited
• If you move to a different super fund or your employer’s super contributions stop, your cover may end without notice
• If you have more than one super fund you may be paying for insurance in each fund, which may be an unnecessary cost
• Tax may be payable on some benefits
• There can be delays in the payment of life insurance benefits as these go to the fund first, who then distribute them to you or your beneficiaries
• If you do not make a binding beneficiary nomination, or your fund does not offer binding nominations, the super trustee will decide who gets your benefits when you die. Usually benefits are paid to dependents, after taking your wishes into consideration
• If your super recipient is not a dependent consider getting financial advice as there may be tax implications

ASIC says the key to deciding if you want insurance through your super fund is knowing how much cover you need and whether your super fund will offer the full amount. Being insured through super is generally a cost-effective and easy option. Just remember that if you change funds your insurance cover may stop.

Call us at First Super on 1300 360 988 for further information.