Should you buy personal insurance through your superannuation fund?

Should you buy personal insurance through your superannuation fund?

Your superannuation fund can generally provide different types of life insurance or personal insurance.

Life insurance and Total and Permanent Disability (TPD) are generally available through superannuation.

Also, other protection, such as accidental death and injury insurance, as well as critical illness or trauma coverage, are available.

Should you insure through super?

Using your super fund to buy personal insurance has advantages and disadvantages, so reviewing how they might affect you is a good idea. 


  • Cost-effective: Insurance through super can be more cost-effective because the premiums are deducted from your super balance, reducing the impact on your day-to-day cash flow.
  • Automatic inclusion: Many super funds automatically provide insurance coverage without requiring medical checks or extensive paperwork.
  • Tax benefits: Some contributions made to your super for insurance purposes may be tax-deductible, providing potential tax benefits.


  • Limited flexibility: Super funds can only offer a standard set of insurance options, which may not fully align with your needs.
  • Reduced retirement savings: Paying insurance premiums from your super balance means less money invested for your retirement, potentially impacting your final payout.
  • Coverage gaps: Depending solely on your super fund’s insurance might leave you with coverage gaps, as the default options may not cover all your unique circumstances.
  • Possible tax issues:  Be aware some lump sum payments may be taxed at the highest marginal rate if the beneficiary isn’t your dependent.

While these insurance products can provide valuable protection, it’s essential to be aware of circumstances where coverage might not apply. For example, super funds may cancel insurance on inactive super accounts that haven’t received contributions for at least 16 months. Some funds may cancel insurance if your balance is too low, usually under $6000. Automatic insurance coverage may not be provided if you’re a new super fund member aged under 25. 

Should you require further information in relation to buying personal insurance through your superannuation fund, please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.

The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.