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Insurance within super

Type of insurances

Section: 10.2

The following table presents the main personal insurances available within the superannuation market:

Product Description
Term life (death cover) Term life insurance pays a lump sum to the policy older (or their beneficiaries) on the death of the life insured.
Total and Permanent disablement (TPD) TPD insurance pays a lump sum to the life insured if they suffer a total and permanent disablement and are unable to work again.
Income protection Income protection insurance pays an income stream benefit if the insured, upon suffering  a disabling event, is unable to continue generating income.

Trauma insurance

Section 31(1) of the SIS Act, provides that the regulation may prescribe standards applicable to the operation of regulated superannuation fund. Prior 1 July 2014, the superannuation fund trustee was entitled to determine whether the provision of trauma insurance by a superannuation fund is acceptable, having regard to all the circumstances of the fund. However, the SIS Act which applied from 1 July 2014, provided that a trustee of a regulated superannuation fund must not provide an insured benefit to a member unless it was consistent with specified condition of release1,2. These conditions of release are relevantly death terminal medical condition, permanent incapacity or temporary incapacity. This amendment has the effect of no longer permitting the superannuation fund trustee to offer trauma insurance. Any trauma conditions that were within the meaning of terminal medical condition, permanent incapacity or temporary incapacity, could technically be offered and held.2

1. [1] SIS Regulations, reg 4.07D(2); and unless the member joined the fund before 1 July 2014 and was covered in respect of that insured benefit before that date: reg. 4.07D(3). 2. Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

Last modified: Wednesday, August 25, 2021