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Your Super Might Provide You With Insurance Options – But Are They Better Than An Actual Provider’s?

Taking out insurance through a super fund can be a great option for some members, but it does also come with some pitfalls.
Super funds typically offer three types of life insurance for their members – life cover, total and permanent disability and income protection insurance.
Most super funds will provide their members with insurance options and an option to increase, decrease or cancel default insurance cover. Typically, most will automatically provide you with life cover and TBD insurance, and some will also automatically provide you with income protection insurance.
There are many benefits of taking out insurance through super, including the ability to purchase policies in bulk, not having to pay for premiums with your take-home income, and the convenience of having your policy managed for you.
Additionally, life insurance inside super is deductible to the fund at 15 per cent annually; whereas life insurance premiums held outside of super are not tax-deductible.
However, there are pitfalls of holding insurance through your super. Generally, there is a limit on the payout that can be received from an insurance policy purchased by a super fund.
For some self-managed super funds, there may not be a limit – depending on what your insurance company is willing to cover. In public funds, it is usually between $100,000 and $200,000. This amount may be more than enough for many people. If you have dependents and a mortgage, it may be an insufficient amount to look after your loved ones, should something happen to you.
Members of super should be aware that life insurance coverage inside super ends when you reach a certain age (usually 65 or 70), whereas policies outside of super may cover you for longer.
Another important note to make for new super account holders is that insurance may not be provided to you if you are aged 25 or under, or have a super account balance under $6,000. In that case, you can contact your fund to request insurance through your super directly, or are employed in a dangerous job where the fund chooses to give you automatic cover.
Anyone using a super fund to provide insurance should ensure that they have an appropriate death benefit nomination in place that specifies who their super will go to in the event of their death. Speaking with a specialist like us can assist you in ensuring that your super fund balance doesn’t become the next big superannuation court case.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier