4 changes that could impact Insurance via Superannuation

Many Australians choose to buy their life insurance through Superannuation and doing so could help with affordability and a guarantee of cover, but it can be a compromise solution. It’s also important to note that seemingly innocuous life events may impact the level of cover provided by life insurance through Superannuation. The four changes to be aware of are:

Consolidating your superfunds

Rolling all your Super into the one fund can be a wise move – it may save you administration fees, reduce your paperwork and make it easier to keep track of that retirement nest egg.

Commonly, people will look at exit fees and investment performance when deciding where to consolidate their Super, but it's also important to consider the impact of consolidation on life insurance coverage.

That's because life insurance can be discontinued when you move funds, and not all funds offer a level of coverage that may be appropriate for you and your family.

If you wish to consolidate funds, in addition to other personal considerations, consider the life insurance, total permanent disability insurance and income protection insurance options available in the chosen fund.

Use a clear filing system to store important salary, super or investment documents throughout the year, this will make them easier to locate when you need them.

Changes in personal relationships

If you experience a major change in your personal relationships, it could impact your insurance arrangements. Depending on your circumstances, it may be appropriate to update the details of your insurance beneficiaries with your Super fund.

Reaching age 65

Before you hit this milestone you may wish to take a look at what life insurance your Super fund offers beyond the age of 65.

Many super funds stop providing life insurance when members reach a certain age (usually 65 or 70).

Having said that, there are policies available outside superannuation, that may help you stay protected for longer.

Withdrawing Super

There are circumstances under which you can access your Super early, including compassionate grounds, terminal medical conditions and severe financial hardship.

But it's important to consider that if you withdraw a large amount of Superannuation from your fund, your life insurance coverage may be adversely impacted or discontinued altogether.

If you want to discuss whether these changes could impact you, get in touch to review your superannuation.

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Jason Pearce, Jared Painter and JP & JP Financial Services Pty Ltd are Authorised Representatives of Vivid Financial Planning Pty Ltd AFS Licence No. 478 937. Please note the information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or offer document prior to making a decision.