Getting life insurance through your super can only make 20% of what you need

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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Does it really matter where you decide to get your life insurance? So long as you are covered right? It might mean more than that if you are looking to get value for your money and family. Getting life insurance through an insurer versus through your superannuation is kind of a nectarine or peach situation.

At a glance, they might look the same, but when you look again both have distinct features that outweigh the other in benefits. It all depends on how much fuzz you want on your fruit. 41% of people consider life insurance to be too complicated, while 1 in 3 wouldn’t know where to start when going about buying life insurance. Knowing the differences between buying life insurance through an insurer and through your superannuation is a start.

Getting life insurance through an insurer

You will be surprised to find that getting life insurance through an insurer either online or face to face is not as expensive as you think. 81% of Australians believed that insurance is expensive, 61% overestimated the cost.

Life insurance through an insurer will ensure that you get a cover that is suited towards you and your needs. It is evaluated on a case-by-case basis, so you can rest assured that you won’t be blanketed under one roof.

The level of cover will be determined by you but in order to make sure that you don’t over or under insure you will have to calculate how much you need beforehand. Speaking to an insurer or a financial advisor is the first step.

Savvy CEO, Bill Tsouvalas points out that, “Professionals work with you to tailor solutions from the ground up, so you pay the right amount for your coverage. Just like a consultation with a solicitor or a doctor, financial advisors work with you in the same regard, explaining everything for you so you make the right decision. It’s the right choice to protect yourself or your family.

Getting life insurance through your superannuation

Life insurance through your superannuation can offer you a huge discount due to the fact that it is purchased in bulk. It offers minimum cover that will offer things such as death cover, Total and permanent disability (TPD), and Income Protection.

You can also adjust how much cover you would like to have depending on your age and your needs when it comes to your super.

Getting life insurance through your super is also helpful when you have a tight budget to stick to. The bonus is that your premiums are paid out of your superannuation balance instead of your taxable income which is a great tax perk.

Your premiums can also be automatically deducted which makes it easier to manage. Some funds go as far as allowing you to join without any medical checks required.

The cons

Through an insurerThrough a superannuation fund
Probing into your medical history to determine the level of premiums you should pay.It works on a one size fits all basis, which means you won’t be able to tweak it to tailor your needs. Superannuation only.
Premiums cost more when compared to using a superannuation fund to cover you. Risk of being underinsured. Life insurance through supers usually offers $100.000 – $200,00 when you will need something closer to $1 million for your family.
More detailed application process to tailor towards your needs.Payouts may be delayed.
You will have to manage your payment plans to make sure that you meet payments. Failure to do so will make your policy void.Superannuation life insurance doesn’t offer Trauma Insurance.
If you are looking to make big savings on premiums you will have to start out while you are still young and healthy, or adjust your lifestyle.Reduces your retirement balance.

Now you decide

The choice will lie with you as to whether you choose money over value. The take home is that you compare to make sure that at the end of the day you walk with a cover that will protect you and your family.