Understanding Life Insurance
Different life insurance products are designed to protect you from different events that can occur​​​
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​​​Life cover:
Pays a lump sum when you die
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Total & permanent disability (TPD):
Pays a lump sum to help with rehabilitation and living costs
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Trauma & critical illness:
Covers you if you’re diagnosed with a major illness
Learn more >​​​​
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Income protection:
Pays some of your income if you can’t work due to illness or injury
​​​​Stepped premiums
Recalculated at each policy renewal, usually increasing each year based on the higher chance of a claim as you age
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Level premiums
Charge a higher premium at the start of the policy, but changes to cost aren't based on your age so increases generally happen more slowly over time.
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Your choice of stepped or level premiums has an impact on how much your premiums will cost now and in the future.
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Regardless of which way you choose to pay for your cover, premiums are not guaranteed and may change annually. Speak to your insurer or read the PDS for more information.
Total & Permanent Disability Insurance TPD
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This insurance pays a lump sum payment if you become totally and permanently disabled due to illness or accident and you are unable to ever return to work. It is essential top understand your options.
Own Occupation
Allows you to claim benefit if you are unable to work with in your own occupation/industry. Own occupation is typically more expensive than any occupation and usually selected if you work in a specialist occupation.
Own occupation is also only available outside of superannuation as a stand alone product.
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Any Occupation
You are only able to claim on this insurance if you are unable to work any job. This insurance is typically cheaper and can be held with in your superannuation. If you work in a particular field and you are unable to do that job anymore due to injury or illness, but you are able to work a desk job then you will not be able to make a TPD claim under 'any occupation' cover.
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Policies with in Superannuation
Superannuations funds typically allow you to have Life, TPD (any) and income protection insurance.
If you income protection policy is paid by your super then it is not tax deductible.
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Rollover rebate
When your insurance is paid through your super you will receive a 15% premium reduction. Typically you have to pay your premiums annually with most superannuation accounts.
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Pros
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Cheaper premiums — Premiums are often cheaper as the super fund buys insurance policies in bulk.
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Easy to pay — Insurance premiums are automatically deducted from your super balance.
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Tax-effective payments — Your employer's super contributions and salary sacrifice contributions are taxed at 15%. This is lower than the marginal tax rate for most people. This can make paying for insurance through super tax-effective.
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Cons
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Limited cover — The level of cover you can get in super is often lower than the cover you can get outside super. Default insurance through super isn't specific to your circumstance and some eligibility requirements may apply.
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Cover can end — If you change super funds, your contributions stop or your super account becomes inactive, your cover may end. You could end up with no insurance.
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Reduces your super balance — Insurance premiums are deducted from your super balance. This reduces your savings for retirement.