October 09, 2023 | 8 min read
Summary: When it comes to securing your financial future and protecting your loved ones, life insurance is a key consideration. Here, we'll explore some of the pros and cons of having life insurance inside your super, helping you make an informed choice to suit your own individual circumstances.
When it comes to securing your financial future and protecting your loved ones, life insurance is a key consideration.
A common question that crops up for us is whether you should have life insurance within your superannuation fund. This decision has its share of advantages and disadvantages that warrant careful consideration.
Here, we'll explore some of the pros and cons of having life insurance inside your super, helping you make an informed choice to suit your own individual circumstances.
There are several key benefits of having life cover within your super:
The main issues with having your life cover within your super are:
Firstly, assess your needs. Start by evaluating your personal circumstances, including your financial obligations, family situation, and existing insurance coverage.
This will help you determine whether the default coverage provided by your super fund is sufficient, or if you need additional insurance.
Once you’ve done this, consider the following steps:
It’s also important to note that insurance in super is no longer automatically provided to those who are under 25 years of age unless they work in a dangerous profession. However, it can still be obtained by under 25s upon request. Similarly, insurance is no longer automatically provided to new super fund members if their balance is under $6000.
As life progresses, it is just as important to not be over insured as being under insured. For example, if your children have left home and your mortgage has been paid off, the level of cover you require will be substantially less than those with home loans and school fees to pay.
Insurance in super also has lots of free benefits and services for members, including counselling and mental health support. For instance, one tool we have for members insured with MLC Life Insurance is our Vivo platform, a holistic health, wellness and recovery program that includes a broad range of products, services and specialist offerings to help our members achieve their health and wellness goals.
The decision as to whether or not you should include life insurance within your super fund requires careful consideration of the pros and cons. While the cost-effectiveness and convenience of group insurance policies can be appealing, there are potential limitations that might not meet your individual needs.
By assessing your situation, comparing policies, seeking professional advice, and reviewing your coverage regularly, you can make an informed choice that provides the right level of financial protection for you and your loved ones.
Remember, there is no one-size-fits-all answer, and your decision should be based on your own circumstances and future goals.
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This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the Insignia Financial group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at November 2023 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. It is recommended that you consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you make any decisions about your superannuation. You can obtain the latest copy of the PDS (or other disclosure documents) and TMD by calling us on 132 652 or by searching for the applicable product at mlc.com.au. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.