Life insurance is a big topic for a lot of people, and knowing what your options are can make sure you take the right course of action for your situation. Superannuation, often done using an account called a Super Account, refers to a pension program that is generally set up by companies for their employees and it has its own pros and cons to consider. Here’s some information to keep in mind if you are looking for life insurance through a Super to help you make your decision when you compare life insurance with iSelect or a similar service.
Getting life insurance inside a Super can be more affordable, but it isn’t for everyone. One upside to using this method of acquiring life insurance is that the life insurance premiums are paid for by the account itself leaving you with more money in the short term as you have fewer costs to worry about.
Since superannuation accounts are reliant on being managed in a way that increases its value over time, though, you will likely end up with less money to work with when you need to use your retirement fund later on. This may be balanced slightly by the 15% tax deduction rate, but depending on how the taxes work out for the life insurance policy’s beneficiary it may be outweighed by a 31.5% tax on the “death benefit.”
Since life insurance acquired through a Super is inherently associated with an organization of some kind, you might not have as much control over the results as you might with a retail insurance policy. Superfund trustees are inherently entitled to exercise their own discretion if they are not legally required to do anything with the death benefit of your policy, so you need to be extremely careful with how you handle the legal end of this agreement.
Beneficiary nominations can also potentially be declared invalid as well, and if the trustees need to use their discretion as a result of this the payout of the policy could end up going somewhere you don’t want it to or even become the subject of a legal dispute.
You might end up with less money in your retirement find, but depending on what you want to focus your effort on this could potentially be a reasonable trade-off as they tend to provide “death cover” and Total and Permanent Disability policies automatically if you take advantage of Superfund insurance for some other reason.
Be warned that this TPD insurance is not as useful if you end up disabled to the point that you are only unable to work your current job, as the TPD commonly associated with superfunds is commonly called “Any Occupation” TPD and is a far less specific kind of insurance that does not apply itself in the same way “Own Occupation” TPD does.
It is also worth mentioning that these funds also require a measure of commitment since they tend to require a minimum investment of $6,000 before you can leave them alone entirely. In the event that your investment is below this minimum amount, you will probably need to make a contribution within any given 16-month period or you run the risk of the Superfund policy being canceled.
There are good reasons to consider investing in a life insurance policy through a Superfund, you just need to make sure that those reasons are good reasons for your situation and Compare life insurance policies whenever you can. Whether or not you find the services that a Superfund provides to be worth the trouble is balanced by several factors like the cost and how easy it is to handle the life insurance overall. The final decision is ultimately up to you, and you should make that decision with the best information you can so don’t be afraid to take some time to search for the best deal you can.