Share This Post Here

Understanding your Superannuation Insurance Policy

Most Australians have superannuation insurance, but it’s not something they consider until the worst happens and they need it.

Your super fund usually has an insurance policy that can provide compensation if you can’t work temporarily or permanently due to injury or illness.

Understanding your superannuation insurance policy details is important so you know how much you’re paying and whether you’re fully covered. If you’re not sure, read this article to learn more.

Insurance policy claim Lawyers

Types of superannuation insurance

Super funds usually provide insurance automatically. This can include:

Total and permanent disability insurance

This is usually a lump sum paid if you’re injured or ill and can never work again. This insurance is required by Australian law and cover usually ends when you turn 65.

Temporary disability insurance

This is usually in the form of monthly payments if you’re injured or ill and can’t work for a period of time.

Income protection insurance

This is usually around 75–80% of your income if you can’t work for a period of time. It doesn’t cover redundancy or reduced shifts – only injury or illness. Not all super funds provide this insurance by default, so you might need to apply for it separately.

Life insurance (or death cover)

This will provide for your loved ones if you die. This cover usually ends when you turn 70.

Check with your super fund if you’re not sure what insurance you have.

If you suffer an injury or become very ill, and can’t work as a result, the amount you can be paid depends on the extent of your health problem and how long you’ll be away from work.

Be aware that this is different from workers compensation, which provides compensation for income and medical fees if you’re injured due to/while doing your work. You can usually still make a superannuation insurance claim if you already have work cover or other disability support.

Benefits of superannuation insurance

Superannuation insurance might not be the most interesting topic, but it will be extremely important if you need it. Here are some benefits of having adequate super insurance cover:

  •       It can be cheaper to buy cover through your super fund than as an individual. Super funds can buy in bulk and negotiate better premiums for members.
  • Premiums may also be lower because the super fund gets a tax deduction for them.
Superannuation insurance Lawyers
  • You can usually get cover regardless of the state of your health. Most funds will give you the default level of cover without a health check. This can be helpful if you have a condition that limits the insurance you can get outside your super fund.
  • You can usually increase the amount of cover if you need more, though this might require a health check and more details about your medical history.
  • Premium payments are deducted from your account automatically, so you won’t forget a payment and risk being without cover.
  • Paying for insurance through super is tax effective because your employer’s contributions are taxed at 15%.

Making sure you’re covered

While understanding your superannuation insurance policy has many benefits, you do need to be aware of some pitfalls. For example, the amount of cover you’ll get might be lower than if you get it outside your super. It also doesn’t consider your circumstances – so you might need to make changes to ensure it meets your needs.

Take the time to ensure you have enough insurance cover for your needs. Your regular superannuation statement outlines what you have. Your fund will also provide a PDS (product disclosure statement) that tells you who the insurer is and any conditions to making a claim. This information can be dense to get through, but it’s vital to understand.

Check whether the default cover provided will cover you, and whether you will need to increase that cover when you have a family. If you have a business or a mortgage, you might want to keep income protection insurance (or get it as extra if your fund doesn’t automatically provide it).

Also check whether you’re paying for cover you probably don’t need. If you don’t have dependants, you may decide to cancel the life insurance (death cover). But remember to check and update your insurance cover if your life changes.

Finally, make sure you’re not unnecessarily paying a loading on your premiums, which can occur if they place you in a high-risk category.

Many super funds have calculators on their website that can help you figure out how much insurance cover you need.

How insurance affects your super balance

While having this superannuation insurance cover is vital, remember that the insurance premiums are taken out of your superannuation balance. This means there’s less money in your account growing over time and a reduced final balance when you retire.

So it’s really important to stay across your insurance, as unnecessary coverage and fees can have a real impact on the balance.

Understand your Superannuation Insurance policy

When super insurance can be cancelled

In 2019, the Australian Government legislated that superannuation funds cancel insurance cover for any fund that hasn’t had a contribution in 16 months.

Then, in 2020, the government made further changes to superannuation insurance, which affect people who are under 25 or have a low superannuation balance.

Super funds cannot automatically offer insurance to members if they are under 25 or have a superannuation balance less than $6000. (Though the rules are a little different if you work in a ‘dangerous occupation’.)

The aim of these changes is to protect young people and those with small balances from ongoing fees that can erode what little they have in their super account.

If this affects you and you want to keep your insurance, contact your super fund to opt in for insurance cover. Alternatively, you can add extra money to your superannuation account if your balance isn’t high enough to cover your insurance premiums.

Be aware that super funds may also have their own rules about when they cancel insurance on super accounts with low balances or no contributions. For example, some cancel insurance after 13 months of no contributions, rather than the legislated 16 months.

Having more than one super fund

Many people have more than one superannuation fund because they have started a new one at each new job. If you’re in this situation, this could be causing several problems:

  •       You might be paying more in premiums than you need to across multiple insurance policies.
  •       Some of these funds may have low balances, so you’re not getting the right amount of cover.
  •       You might not be able to claim on multiple policies.
  •       All the premiums and fees are probably reducing your retirement balance.

Block out some time to check all your super funds and consider consolidating your accounts if it will work out better for you financially.

Making a claim on superannuation insurance

Generally, you can make a claim if you are injured or become ill, and that prevents you being able to work temporarily or permanently.

Most of the time, you need to have been covered by insurance when you first stopped working. Some funds stop insurance cover when you stop putting money into the fund, while others continue to cover you. This is important to find out.

Super Insurance law experts

If you do make a claim, your premiums won’t increase above the normal cost for your age, cover amount and work rating. But, in some circumstances, you might not be able to claim for that illness or injury ever again.

It can be difficult to make a claim on your super insurance. Funds can even deny claims for no real reason. So if you want to make a superannuation insurance claim, you should get legal advice first.

How Main Lawyers can help

Understanding your superannuation insurance policy can be more complex than it looks. If you have a pre-existing medical condition, you might be denied cover. Or you might move into part-time employment only, which may make you ineligible for total and permanent disability cover.


  • There may be tax implications, as some benefits might attract tax.
  • Payments might be delayed because the insurer pays the super fund, not you.
  • Claims relating to COVID-19 might not be covered.
  • As discussed, a fund might even deny your claim for little reason.

Unfortunately, many of these details can be buried in the fine print. You need a legal professional on your side to make sure you get what you’re entitled to.

At Main Lawyers, our superannuation insurance experts will examine your case and give you all your options – including some you may not be aware of. We will help you make a claim and take care of all the paperwork for you, including dealing with the super fund and insurer.

It’s best to start the process as soon as you’re able to after your accident. There may be time frames for claiming and other delays involved – so the sooner you start, the better.

We can come to you if you can’t make it to our Brisbane or Gold Coast office, or we can meet with you remotely.

Contact us today for a free, no-obligation chat about your circumstances.