An Investigation of AustralianSuper’s Life Insurance Cover

Published: August 31, 2018

If your super fund is with AustralianSuper and you want to review your automatically included life and TPD coverage, or you're contemplating joining this supperanuation and wondering whether you should opt-out of the insurance coverage they provide and instead get protection elsewhere, then keep reading.

We unpack which life insurance products AustralianSuper offers its members and whether it provides value for money.

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About AustralianSuper

AustralianSuper is an Australian superannuation fund that was formed in 2006 and is now Australia’s largest industry super fund, as well as one of the first funds to stop automatically signing up young members for insurance.

Superannuation members under the age of 25 will no longer receive default life on TPD insurance. However, members over 25 years-old will still need to proactively opt-out of the automatically included insurance coverage.

According to AustralianSuper, they paid over $2.6 billion in insurance claims over the past 10 years and in February 2018 they announced their deal with insurer TAL to cut insurance premiums by an average of:

  • 14% for death benefits,
  • 6% for total and permanent disablement (TPD), and
  • 20% for Australian Super income protection insurance.

Your AustralianSuper insurance guide

The super fund uses its size and scale to negotiate discounted insurance rates, to help you keep your life cover costs down. Products available include:

  • Life insurance
  • Australian Super TPD
  • Income protection

Have a look at the pros and cons of having insurance inside your superannuation, before making a decision.

When joining the fund, most members will automatically receive a basic level of coverage. However, you can apply to increase, reduce or cancel your cover at any time. Increasing your cover amount will be subject to your eligibility conditions and age.

Premiums are deducted straight from your super account, which provides added convenience, but might also decrease your retirement savings in the long run.

Death benefits and Australian super TPD

Basic age-based death and TPD cover starts when you join the fund and are at least 20 years old. This automatic cover does not require any health information and is designed to provide you with a lump sum amount if you:

  • Pass away: Your death benefit will pay out when you die and is also payable when diagnosed with a terminal illness, which two treating doctors (one must be a specialist in your condition) have stated will result in your death in less than 24 months.
  • Are unable to work due to total and permanent disablement: Pays a lump sum when you can't work in Any Occupation or can no longer do everyday working activities, for example: Can't walk more than 200 meters on a level surface without breathlessness or severe discomfort or read ordinary newsprint even with glasses or contact lenses.

Aged-based AustralianSuper life insurance and TPD

AustralianSuper Insurance Guide (May 2018)
Age Death Cover TPD Cover
20 $50,000 $25,000
25 $116,000 $48,000
30 $178,000 $61,000
35 $180,000 $53,000
40 $160,000 $43,000
45 $125,000 $29,000
50 $80,000 $17,000
55 $37,000 $9,000
60-64 $9,000 $5,000
65-69 $9,000 N/A

Because group policies, like this one, do not usually ask extensive health question when you apply for a policy, the company will generally mitigate their risk of you possibly lodging a claim by decreasing the amount of coverage they offer as you get older.

Increasing your life and TPD coverage

If you have basic death and TPD insurance, you can apply for more cover by either:

  • Topping up your basic cover with an extra (fixed) amount: Your aged-based cover will continue to change as you get older (as per the table above), but the additional protection you added will stay the same unless you change it.
  • Apply for a total amount of fixed cover: The amount of protection you applied for remains the same, with the cost generally increasing as you get older.

The maximum amount of life insurance you can apply for is usually unlimited but depends on the plan and division you join. Australian Super TPD cover goes up to a maximum of $3 million. When applying for more coverage, you’ll usually have to provide detailed health information.

Please carefully consult the Australian Super life insurance PDS for all the details.

Australian super TPD and death exclusions

Generally, AustralianSuper will not pay you or your nominated beneficiary a benefit if within 12 months of your policy starting your die because of suicide or you become terminally ill or totally and permanently disabled because of intentionally harming or trying to injure yourself.

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Australian super income protection

Income protection is available for members between 15 and 69 years old, providing a monthly benefit of up to 85% of your regular income when you're temporarily disabled, of which up to 10% is paid to your Super.

  • Benefit period: Choice between 2 years, 5 years or up to your age 65.
  • Waiting period: You can choose a waiting period of 30 or 60 days.

Like your death and TPD cover, upon joining Australian Super, you'll receive a basic age-based income protection policy, which automatically starts when you turn 25. However, you can opt to take a fixed cover income protection policy instead where, unlike the aged-based cover, your benefit does not reduce as you get older, but the premium will generally rise.

Aged-based Australian Super Income Protection

AustralianSuper Insurance Guide (May 2018)
Age Income Protection Monthly Benefit
25 $19,000
30 $2,500
35 $3,000
40 $3,100
45 $3,100
50 $3,000
55 $2,800
60 $2,700
61-63 $2,600
64 $2,500
65-66 $2,400

Basic income protection cover is based on your age and individual work rating. The maximum monthly benefit you can apply for is $30,000. However, the payout you’ll receive is dependent on whether you’re claiming full or partial payment:

  • Full payment: You’ll receive the full benefit (75% +10% less tax) when totally disabled and unable to earn an income.
  • Partial payment: Part of your benefit will pay out, less tax if you're partially disabled and only able to work part-time. Carefully review the PDS for particulars.

Your work rating for an Australian Super income protection policy

The type of work you do influences how much you’ll pay for income protection. When applying for salary continuance insurance your work rating will be Standard unless you apply for a change.

If you spend at least 80% of your work time in an office environment and do not do any manual work you might qualify for a Low-risk or Professional work rating, which means you’ll pay less for your cover.

Exclusions

Your income protection benefit from AustralianSuper will generally not be payable if an illness or injury was caused by:

  • An intentional self-inflicted act or suicide,
  • Normal pregnancy or childbirth,
  • Your services in the armed forces, excluding the Australian Armed Forces Reserve
  • War or acts of war

Kindly note; many benefits are generally not included when taking income protection insurance through super.

Questions and answers about Australian Super life insurance

Who underwrites AustralianSuper life insurance policies?

From 26 May 2018, AustralianSuper insurance is provided by TAL Life Limited.

How do I cancel my insurance online on AustralianSuper?

You can cancel your life insurance coverage by logging into your online account, or by submitting a request for cancellation form to the insurer via email.

Where can I get an AustralianSuper insurance quote?

Request a life insurance quote on their website by visiting their insurance page and selecting your age.

How to make an Australian Super income protection claim?

Start the claims process by contacting the insurer on 1300 667 387, and they'll send you a list of documents you and your doctor will need to complete. After submitting your claim forms, certified birth certificate and requested documentation, including a medical attendant's statement, your claim will be assessed, and your insurer will notify you of your acceptance status.

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