From investment options to concessional contributions and a multitude of things in between, there are a number of concepts that people tend to find a little confusing about super before they delve in. One of these is life insurance through super – why do we have it?

The answer goes back to the origins of super as a benefit for employees, with employers running dedicated pension schemes for staff. With these schemes tied to employment, insurance was introduced to provide for employees who were unable to work.

Qantas Super, for example, was founded in 1939 as the Qantas Staff Pension Scheme to recognise the contributions employees had made to the company throughout their working lives, by providing for them in retirement in return.

With war declared in Europe soon after the Scheme’s founding, the insurance protections it offered proved to be the saving grace for a number of Qantas employees and their families.

Qantas staff and their dependants weren’t covered by war service benefits or payments, like those provided to merchant sailors.

Instead, the Qantas Staff Pension Scheme provided support to a number of the families of the 17 Qantas staff who died by enemy action or accidents between 1939 and 1945.

While a number of funds offered insurance to members over the years, providing members of default funds with a minimum level of insurance through super became a formal requirement in the mid-2000s, via the Howard Government’s 2005 Choice of Fund reforms.

This requirement was expanded from 2013, with all MySuper products required to include insurance.

How does insurance through super work?

Insurance through super is classed as ‘group life insurance’. This means the policy is purchased by the super fund to cover a large number of members. Because of this scale (or the number of members that the policy covers) the cost of insurance through super is generally lower than if you were to take out the cover as an individual.

In addition, for members working in certain occupations that are classed as being dangerous or higher risk, the provision of insurance through super gives them the opportunity to receive cover that they may not be able to get outside of super.

According to MoneySmart, more than 70 per cent of Australians that have life insurance now hold it through their super.

What type of insurance can you get through super?

Generally, you can receive three types of insurance through your super:

  • Income protection: can provide you with a monthly income if you become ill or injured and are temporarily unable to work. For some defined benefit members, this cover is known as disability cover or ‘total but temporary disablement’. This cover will end after you leave employment at the Qantas Group.
  • Total and permanent disablement (TPD) cover: can provide you with a lump sum payout to help out if you become totally and permanently disabled and can no longer work.
  • Death cover: can provide your dependants with a lump sum payout if you pass away. This is also known as life insurance or “life cover”. If you are diagnosed with a terminal condition, you may be able to receive an advance payment of your death benefit as a terminal illness benefit.

This is known as Basic Cover (or Standard Cover, if you’re in a division other than Gateway), and is automatically provided to you as a new member if you fit the eligibility criteria.

Insurance cover differs depending on the division you’re in, so it’s important to check what you’re covered for. You can also take out extra voluntary cover for death or death and TPD.

What is the eligibility criteria to get cover?

As a new member, there are two ways you can get insurance cover from Qantas Super.

To be eligible to receive Basic Cover, you must be 25 or above and your super balance with us must be $6,000 or more. When you meet the criteria, we’ll automatically apply this cover to your account, based on your Salary for Insurance Purposes. Limited Cover will initially apply until you’ve been At Work for 60 consecutive days.

You can also obtain Basic Cover sooner by opting in to receive it. Limited Cover will apply until you’ve been At Work for 60 consecutive days.

Do claims actually get paid?

Yes! In the 12 months to 30 June 2020, the industry average of claims accepted by super funds was 98.1 per cent for death cover claims, while 90.8 per cent of claims for TPD cover were accepted over the same period.

What is Voluntary Cover?

Depending on your circumstances, you may find that your insurance needs are higher than the amount of Basic Cover provided to you automatically. If this is the case, you may want to learn more about applying for Voluntary Cover.

You may be eligible to apply for Voluntary Cover up to $750,000 for death or death and TPD without providing evidence of good health (in other words, going through an underwriting process). If you require more cover, you can apply for amounts above $750,000 by going through underwriting. Your application will be assessed by our insurer.

It's important to review your cover

While you may receive automatic cover through super, it’s important to ensure it suits your needs as they change over time.

For example, big life events like buying a property or having kids could be a good time to review your level of cover. If the worst were to happen, what would your benefit need to cover?

As well as your mortgage, you should consider other outgoings like school fees, car payments, and so on. And if you’re the primary wage earner and your partner is the primary carer, you may want enough coverage so the children can be looked after until they’re old enough to fend for themselves.

On the other end of the spectrum, once the kids have left home, the mortgage has been paid off, and you’re starting to think about retirement, you might want to re-evaluate your cover again.

While you may no longer have a mortgage to worry about, it’s important to think about those you will be leaving behind and how much they will need to cover their expenses and enjoy a healthy lifestyle.

To begin, you can see how much cover you already have by logging into your account and heading to the Insurance section.

You can then start to calculate your insurance needs with MoneySmart’s calculator. A Super Adviser can also help you understand your insurance cover and the level of cover you need.

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