Learn About Learn about paying for a policy through Super

To ease the cost of life insurance, some people hold their policy within super. This can be cost effective as it allows the premiums to be paid for with pre-tax dollars (as a contribution) or with accumulated super (through a rollover from your super fund).

First a note about policies not held in Super. An “Ordinary” policy is held outside your super account and paid for via your preferred payment method e.g. monthly debit from your bank account or annual credit card payment. In the event of a claim, any benefits are paid to your or your beneficiary(s) directly. Simple.

Most super funds have a built-in insurance offering. It will generally start once you've turned 25 and have a super balance over $6,000. This cover will continue while you're receiving employer contributions and the cost is automatically deducted from your super account.

This type of cover will generally be low cost and can be a cost-effective way to hold insurance, however the benefits and features are usually more basic and there are disadvantages in holding insurance in your super fund to be considered as outlined below.

Extra Resources .

Check out some additional reading on Insurance through Super.

• Moneysmart- an explanation of how insurance in super works.
• Canstar's article on pros and cons of insurance in Super.

To ease the cost of life insurance, some people hold their policy within super. This can be cost effective as it allows the premiums to be paid for with pre-tax dollars (as a contribution) or with accumulated super (through a rollover from your super fund).

Retail Super policies are a fully featured product. In effect, you become a 'member' of the insurance company's fund designed especially for insurance. This isn't an accumulation fund and doesn't replace your usual super fund account.

There are two ways to pay:

Rollover - a rollover is when a member transfers their super between funds. With this set up you instruct your fund to move funds equal to your premium into the insurance super account via an Enduring Rollover.

Contribution - you can pay by making a contribution to your super fund provided you stay below the concessional contributions cap. Concessional contributions are additional contributions that are made into your super fund before tax. From 1 July 2025, the concessional contributions cap is $30,000.

The advantages of this policy structure are:

• Super is subject to different tax rules so the premium can be lower.
• If paying by rollover, the insurance premiums are paid from your super fund instead of your cashflow and attract a 15% rollover rebate, reducing the cost of your premiums.

So, holding your insurance within your super account can be a great option, but there are some drawbacks to be aware of:

• this arrangement can deplete your super balance, which may have a long-term impact on your super account balance and final capital at retirement.
• any successful claim will be subject to your Super fund's conditions of release; even if the insurer agrees to pay the claim, the Trustee of your super fund will need to agree to release the money to you.
• Super based products have fewer features and benefits - you should carefully read the product PDS before committing.

A Superlink arrangement is where the cover is held across two policies.

One sits inside super and is paid from your super account. The other sits outside of super and is paid for from your cash flow. In the event of a claim, the disability definitions in the super policy will be assessed first and, if the claim is not successful, the insurance company will assess if the claim can be paid from the policy held outside super.

A successful claim will reduce the cover across both linked policies.

This arrangement offers:

• Some tax and cashflow advantages of Super policies
• Certainty that Superannuation trustee decisions and conditions of release will not impact your claim payment through the policy held outside Super.