Life cover under your superannuation

When an individual buys life cover through their superannuation fund it is cheaper and more tax effective than purchasing it in their own name.

With many changes in super, it has certainly come a lot more popular for consumers to purchase their life insurance through their super fund.

Here at Rate Detective we have taken the time out to look at the benefits and disadvantages of doing so.


The major benefits we see here for taking life cover under your superannuation are:

  1. Its is cheaper due to the fact the fund is able to buy in bulk discount.
  2. The most basic life covers in most cases does not require a medical check up by the consumer.
  3. Through taking life insurance through your super it is tax-effective since the premiums are paid for out of contributions made by your employer or from your own personal contributions that generate either a direct tax deduction (for the self-employed) or are paid from pre-tax income, in the case of salary sacrifice contributions.


The major disadvantages are:

  • A lot of the funds do not provide the necessary cover the individual actually requires.
  • In many cases there can be substantial delays in life insurance benefits being paid since these initially go to the fund, which then allocates them to the beneficiaries, which can be a very much drawn out affair.
  • Unless you have the option of making a binding beneficiary nomination, you can't be certain your life insurance payout will go to the people you want it to.
  • Benefits are subject to more rules limiting who can receive a payout tax free.

Rate Detective recommendation

We highly recommend when deciding what life insurance is best for your personal needs, that you speak to a licensed financial planner. If you don't have one, we can organise a free no obligation financial review and help find a financial advisor in your area who can suit your needs. Just contact us about your life cover.

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Published on August 8-th, 2008 in Life Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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Any information or advice contained on this website is general in nature and has been prepared without taking into account your objectives, financial situation or needs.