Checking your life insurance cover in 2020

Checking your life insurance cover in 2020

New Year, new you right? Have you thought about checking your life insurance cover in 2020? Probably not, but, do you know if you are with a default life insurance policy through your superfund or have you chosen a stand-alone policy?

Do you know the benefits of a default life insurance policy vs the benefits of a stand-alone policy? Unfortunately, we can’t give you a black and white answer as it’s dependent on your lifestyle and some personal key factors. We can however offer some points for consideration below.

Possible advantages of default life insurance
  • Your superfund may have purchased policies in bulk, which may result in lower premiums for you.
  • The premiums are taken from your superfund rather than your personalbank account.
  • You may be able to reduce your personal income tax and pay for your premiums by contributing more to your super fund each month.
Possible disadvantages of default life insurance
  • Your cover may not be as comprehensive as a stand-alone policy.
  • The insurer may not know as much about who they are covering compared with a standalone policy that has been fully underwritten. There may be exclusions you won’t know about until it comes time to make a claim. This may include pre-existing condition clauses or other industry or occupation specific exclusions. Side note* it’s always important to read your T+C’s thoroughly on any policy.
  • Different rules around life insurance policies owned through super may make benefit payments taxable depending on whether your beneficiaries are tax
  • Legislation changes have resulted in some types of cover being cancelled unless you elect to keep your cover in place or make regular contributions.
Lastly, is default cover enough?

The cover amounts in default life insurance are low in many cases. If life insurance is a key part of protecting your family’s financial future, you may need a higher amount. However, if you are young or single, it may be comprehensive enough.