Review Life Insurance from Rest Superannuation Fund

Published: September 11, 2018

Employees working at retail stores like Coles, Woolworths and McDonald's most likely have their super fund with REST. If this is you, chances are you're paying for automatically included life insurance.

REST super insurance provides default insurance cover for members over the age of 18, and generally includes death, total and permanent disablement and income protection. Members of the Retail Employees Superannuation Trust (REST) must actively opt-out of the insurance provided if they do not want REST life insurance or prefer to take out cover elsewhere.

If you are a REST member and don't understand all the insurance deductions and what precisely you're paying for, then the review below should provide you with more clarity.

ComparingExpert does not currently have access to this provider. Visit www.rest.com.au to request a quote and compare their price and benefits online with some of Australia’s major life insurance companies.

How does REST insurance work?

Insurance cover from REST is provided by AIA Australia limited and automatically included for all eligible members over the age of 18. When you review your transaction history, you’ll see super fund deductions for these insurance premiums. If you do not want the default cover, then you can contact your superannuation and request they cancel your cover.

If you have life insurance through REST and decide to opt out, it will be automatically reinstated when you turn 25, and you’ll again have to go through the whole process of opting out if you don’t want insurance from them.

However, if you do decide to cancel and then reinstate your insurance, you generally need to answer health questions, which could lead to insurance exclusions or loadings if you’re health has deteriorated.

Pros and cons of REST super insurance

Benefits Drawbacks
Group policies provided by the fund generally do not require medical tests or complicated health questions and thus might guarantee acceptance. You'll receive and pay for default life insurance cover whether you want it or not. It's up to you to actively opt-out if you do not want REST insurance cover.
The cost of your insurance cover is usually deducted from your REST super account. Making payments effortless. Your insurance will end without notice if your account balance is insufficient and might reduce your retirement savings in the long-run.
Automatic coverage protects you against the possibility of death, disablement, sickness and injury. Trauma insurance is not available through your super fund, so if you want to be protected against critical illnesses, you’ll have to take out a separate policy.
Group policies provided by super might be cheaper due to bulk purchasing. Specific insurance benefits might not be available, for example, free child cover and accommodation benefit.

The REST super insurance guide

If you’re over the age of 18 and join REST Super, you’ll usually receive default cover for:

  • Death: Pays a lump sum benefit to your nominated beneficiaries should you pass away.
  • Total and permanent disablement (TPD): Provides a once-off payment if you can never work again due to total and permanent disablement caused by injury or sickness.
  • Income protection insurance: Receive a 77% monthly benefit when you are unable to work for an extended period due to an accident or sickness. 12% of your pre-disability income will also be paid to your REST super account.

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Life cover and REST super TPD insurance

Death and TPD benefits are generally linked in superannuation. Meaning, if a TPD claim gets paid, your death cover will reduce by the amount paid out.

If you're diagnosed with a terminal illness which a medical practitioner has deemed likely to result in your death in less than 24 months, a terminal illness benefit may also be payable. This benefit will be the same amount as your life cover.

With life and TPD cover from your super fund, you have two options:

number-1Default cover

Changes in line with different life stages. Default death cover starts low when you're younger ($101,200 at age 25), and automatically increases up until you're 45 years old ($368,500), reducing again as you get older. Default TPD cover is a fixed amount of $28,000 at most ages.

number-2Voluntary cover

You can top up your default death cover with a fixed amount, which does not change with your age. You can also add optional disability cover, starting at $10,000 per unit, to your age 59, where it then begins to reduce to nil when you turn 70-years-old. The maximum amount of TPD cover you can take out is $5 million, depending on your eligibility.

Life and TPD exclusions

  • No death benefit will be payable if you die because of suicide within the first 13 months of your policy starting, being reinstated or increasing.
  • A REST super TPD payout will not be paid if an intentionally self-inflicted injury causes total and permanent disablement. 

Carefully review your product disclosure statement (PDS) for the full list of exclusions and limitations.

REST super income protection

The super fund's default income protection policies start lower when you're still young, increasing as you get older, from $2,550 per month at your age 25 up to $2,800 when you turn 50. Your monthly benefit then starts to decrease again at age 60 until it ends when you become 65 years old.

You can increase your REST income protection policy by adding a voluntary unit of $1,000 worth of cover per month until age 65, up to a maximum of $30,000 per month of top-up cover.

  • Waiting period

    You only have the options of a 60-day waiting period. This is a set period and cannot be changed.

  • Benefit period

    Your benefit period ends when you’re able to return to work or at the end of your two-year benefit period, or at your age 65 if this occurs earlier.

Exclusions: No salary continuance benefit will be paid if the disability is due to intentional self-inflicted injury or normal pregnancy and childbirth.

It’s also important to note that your 77% monthly REST income protection benefit may be limited if you receive other income benefits, for example:

  • Sick leave,
  • Worker’s compensation,
  • Motor accident compensation,
  • Social security benefits, and
  • Benefits from other insurance policies

Frequently asked questions and answers

Who underwrites REST insurance?

AIA Australia Limited issues life insurance provided to REST super members.

Will I have enough cover when taking out insurance through REST?

Life insurance through your super fund might not be sufficient depending on your circumstances and insurance needs and whether or not you have dependents. Especially considering critical illness insurance is not available and that their income protection policy only provides a monthly benefit for up to 2 years.

However, every person is different. Please consult a life insurance broker to help you determine the amount and type of cover you need.

Can I cancel life insurance with REST?

Yes, if you can opt-out of your REST insurance cover at any time, by calling the company on 1300 300 778 or log in to your MemberAccess on their website.

What are the tax implications of taking out a REST life insurance policy?

Premiums paid for a life insurance policy held inside super are generally tax-deductible to the fund. A clam paid to financially dependent beneficiaries are usually tax-free. However, when paid to non-financial dependents, like a business or your adult children, the lump sum benefit may be taxed at a rate of up to 35%.

Please note, we are not tax specialist and encourage you to seek guidance from your accountant concerning tax implications regarding insurance through your super fund.

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