Which Life Insurance Company?

[mcbear]

Hi guys

Which Australian life insurance company did you take out your life insurance with?

And did you keep any/all of your SA life insurance?

Just a quick poll, I'm going mad with indecision!

Thanks for your input.

[Gizmo]

Check out your Superannuation benefits. I was recently pleasantly surprised to find out that my Super (of the past 3.5 years) actually has life insurance and disability insurance included (which I had no idea about). Apparently it is quite common with Super packages.

[Bob]

You'll find once you start work in Australia, that you have to take out membership in a superannuation fund so that the employer has somewhere to put 9% of your gross wages / salary into every quarter.

Once you have a super fund up and running, just get in touch with them and see if they have life insurance and disability insurance available to you, as a member.

Industry Super Funds all have this offer available as the fund gets bulk insurance and can insure its members at the bulk rate rather than the costly individual rate if you went to a life insurance company personally.

http://www.industrysuper.com/

[mcbear]

Thanks for the info.

I believe one must just be careful taking out insurance with a super, there are tax considerations if there is a payout, and in addition, make sure that you are able to continue your life insurance policy once you reach retirement age, otherwise you may be shopping for a new life insurance policy at age 65.

But there are definite tax benefits in using your super to pay for life insurance.

[candivw]

A lot of the super benefits like their life cover, disability cover etc all have catches for eg if you are disabled and you can't do your line of work but you can do another job they won't pay out. We saw a financial advisor and took out trauma, disability and life cover with him.

[Mara]

Candivw, may I ask who gave you that information, the super company or the financial advisor?

[candivw]

The financial advisor

[JDJoburg]

Candivw, may I ask who gave you that information, the super company or the financial advisor?

Not all financial advisers are out to get you Mara.

I'm a financial adviser and I can confirm that there are indeed a number of issues that you need to consider when comparing super-owned cover with personally-owned cover, especially with regards to disability benefits. This relates to the taxation of benefits and the "conditions of release" that have to be met before a super fund is legally allowed to pay benefits out. Super funds have legal constraints that limit the flexibility (and extent) of insurance coverage, and these (together with the potential tax implications on payouts) need to be weighed against the principal benefit of super-owned cover, i.e. the fact that premiums can effectively be paid with "pre-tax" money.

I can also confirm what Candivw mentioned previously - due to the "conditions of release" that apply to super benefits, taking an "own occupation" disability benefit through super is generally not advisable because the fund will typically not be able to release the funds unless the disability also meets an "any occupation" definition or until you fulfil one of the other "conditions of release" such as reaching retirement age.

As far as costs are concerned, don't assume that that your employer's super-owned insurance will necessarily be cheaper than individual insurance. I am currently working with an employer group where the super-owned cover is more expensive than individual cover, due to the claims experience in the particular group. I have also seen instances where a fund's insurance is charged at a fixed rate, meaning that older members pay less than market rates but younger members end up paying more than they would've paid for an individual age-rated policy. These issues are related to the benefit design of the particular schemes, not to super-owned cover in general, but again, the point is simply to not make assumptions.

Also keep in mind that group cover is often of a very basic type, without some of the "tailor-made" enhancements that one could add to an individual policy. So while it may be cheaper than your individual policy, it may also offer less comprehensive cover and thus may be less likely to pay out, depending on your circumstances. Read the Product Disclosure Statement (PDS) carefully before making decisions. Life / disability insurance products often differ quite significantly, so you cannot make a sound choice based solely on the premium.

Am I saying you should avoid super-owned cover? No, not at all. I'd say the majority of our clients have their cover (at least their death cover) through super. Super-owned cover often offers attractive benefits such as the tax-efficiency of premiums and (in the case of larger groups) automatic acceptance up to certain levels.

All I'm saying is that you shouldn't jump to conclusions. As is the case with any financial decision, look carefully at your options and your particular needs before committing your hard-earned cash.

Edited July 5, 2012 by JDJoburg

[Mara]

Thank you for your answers JDJoburg, and I am not against Financial Advisors, I was just interested in knowing.

[mcbear]

Thanks JDJoburg, you clarified it very well.

When looking at any policy's disability insurance, you must consider the benefits of being insured for "any" or "own" occupation. There is a definite difference in the premium, and generally you have more chance of a succesful claim if you select the "own" occupation insurance. I would guess that this option applies to insurances via super as well as other insurances.

[CLAREandANDRE]

Depending on your age also look into "levelling" your premium. Also take care, if ever you roll out any Super, if you have insurance within your Super, it may cancel the policies.