Term Life Insurance Inside Superannuation

Everyone has life insurance through their superannuation. What is so different about these policies compared to the ones that we quote at Lifebroker?

Firstly, there are some positives of having your term life insurance through superannuation. It is generally cheaper because the super funds buy the policies in bulk. It is also a tax-effective option as the contributions, by either your employer or yourself, pay for the term life insurance premiums meaning more in your pocket.

Now here come the disadvantages. As the benefit is paid into the super fund there are possible delays in it being paid out to your beneficiaries. In saying this it is also hard to be certain of whom the payment is going to go to unless you have a binding beneficiary agreement. These policies are also not medically underwritten until the time of claim. Even though funds say that blood tests and medicals are not required, this is not a good thing. When your family goes to claim they will need to provide medical history for the life insured and depending on the cause of death and what is detailed in the medical history. These funds will look for any excuse to not pay a claim as they have never given you your own terms for the policy to be obligated to pay one.

Although having term life insurance through superannuation may be more convenient for you and better for your hip pocket, in the long run it is not going to be beneficial for you or your family.