Insurance can place a strain on the weekly budget, especially given the recent surge in premiums. To lessen the burden, super fund members can buy insurance through super so that payments are taken from their retirement earnings.
Insurance through super has often been touted as the cheaper option, as funds can buy products in bulk. But data from SuperRatings finds that the savings gap between insurance inside and outside super is slowly closing.
Premiums inside super have risen substantially, by a median 50.5%, over the 12 months to May. The average increase in premiums for death and total and permanent disability (TPD) cover over the past four years has ranged from 29% to 45% for not-for-profit funds and 2% to 4% for retail master trusts. Corporate funds’ premiums, however, fell on average by 4% to 6.2%.
But SuperRatings considers insurance inside super, whether not-for-profit, corporate or master trust to be a “key offering” and that overall it continues to be good value relative to outside super insurance.
And how can you maximise your benefits? According to SuperRatings data, many members approach lawyers before submitting a claim because they are worried about the complexity of the process.
But Wendy Tse, from SuperRatings, says this can be a mistake.
“We are concerned that members’ insurance benefits are being unnecessarily diluted by legal costs,” she says.
“Members should contact their super fund in the first instance and only revert to legal support as a last resort.”
SuperRatings recommends funds better target benefits to members’ needs to contain premiums and engage better with members so they understand the process.