Have You Accidentally Lost Your Super Insurance?

When was the last time you checked the insurance inside your super fund?

If you're like many others, the answer may be "never."

Insurance held within superannuation can provide valuable protection for you and your family. However, many people don't fully understand what cover they have, whether it remains suitable, or even whether it still exists.

In some cases, people discover they have lost valuable cover only when they need it most.

What Insurance Can Be Held Inside Super?

Many superannuation funds offer insurance that can include:

• Life insurance

• Total and Permanent Disability (TPD) insurance

• Income protection insurance

For many members, this cover is established automatically when they join a fund, with premiums deducted directly from their super balance.

The convenience of having insurance inside super means it is often forgotten about for years.

Why This Can Become a Problem

Over time, your circumstances change.

Your mortgage reduces.

Children become financially independent.

Savings and investments grow.

Your income increases.

Or perhaps you have changed jobs, switched super funds or accumulated multiple super accounts.

If your insurance has not been reviewed recently, there is a risk that the cover you hold may no longer match your needs.

You could be paying for insurance you don't need, or worse, not have enough cover if something unexpected occurs.

The Risk of Losing Cover

One issue that regularly catches people by surprise is inactive super accounts.

Under current superannuation rules, insurance may be cancelled if there has been no activity on an account for an extended period.

This commonly affects people who:

• Change employers

• Consolidate super funds

• Take career breaks

• Work part-time

• Move overseas temporarily

Many don't realise their cover has ceased until they attempt to make a claim.

More Super Accounts Doesn't Always Mean More Protection

It's common for Australians to hold multiple super accounts accumulated from previous employers.

While this can inadvertently result in multiple insurance policies, it can also create inefficiencies.

You may be paying several sets of premiums without realising it.

These premiums slowly erode retirement savings over time.

However, before closing accounts or cancelling cover, it is essential to understand exactly what insurance is attached to each account and whether replacing it would be possible.

Health Changes Can Matter

One of the greatest risks of cancelling insurance is that your health may have changed since the original policy commenced.

If you later decide you need cover again, obtaining equivalent insurance may be more expensive or require medical underwriting.

In some circumstances, new cover may be offered on less favourable terms.

This is why insurance decisions should be considered carefully rather than simply focusing on reducing premiums.

Questions Worth Asking

A simple review can help answer important questions, including:

• What insurance cover do I currently have?

• Is the cover still appropriate?

• Am I paying for duplicate policies?

• Would my family be financially secure if something happened to me?

• Has any cover lapsed due to inactivity?

• Are the premiums good value?

The answers often surprise people.

Insurance and Retirement

As retirement approaches, insurance requirements often change.

Some cover may become less important as debts reduce and financial independence increases.

At the same time, retaining appropriate protection during the transition to retirement can remain important for many households.

The key is ensuring your insurance strategy evolves alongside your broader financial plan.

Key Takeaways

Insurance isn't a topic most people enjoy thinking about, but it plays a crucial role in protecting what matters most.

A quick review of your superannuation insurance could reveal unnecessary costs, gaps in protection or opportunities to improve your overall financial position.

Sometimes the biggest risk isn't having the wrong insurance. It's not knowing what you have at all.

Book a chat with Ashley Smith here