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What’s the difference between life insurance through super and life insurance through a provider?

By  AAMI

Whether you're just considering life insurance cover for yourself, or cover that includes your loved ones, you have a few options on your plate. Two of these are life insurance through your super fund and life insurance directly through an insurance provider.

Here are some of the differences between life insurance through super vs life insurance through a provider.

What is 'life insurance through a super fund'?

This means paying your Life Insurance premiums with money that's sitting in your super fund and generally getting the default level of cover offered. Super funds usually cover total or permanent disability and death.

What is 'life insurance through a provider'?

You can also choose to take out life insurance with an insurance provider.. You'll be able to select from a broad range of covers, as well as choosing your level of cover, and you'll pay the required premium out-of-pocket. Because the policy is entirely set up and managed by you, you can personalise it to meet your needs and budget. For example, someone who set up their AAMI Life Insurance with a low level of cover when they were young, carefree and had zero dependants can easily apply to increase their cover when they tie the knot or have a baby.

How does this compare to life insurance in super?

Because super funds often purchase policies in bulk, the premiums on the policies can be cheaper. These premiums are also automatically deducted, meaning you have one less monthly bill to remember. Often life insurance through super has automatic acceptance without the need for medical questionnaires or examinations.

Why choose life insurance outside super/through a provider?

You generally have more flexibility around the level of cover when you have life insurance through a provider and there are fewer limitations in the types of insurance that can be provided. You may be able to receive the benefit amount faster as payments can sometimes be delayed through a superfund. You also have the option to cover major illnesses which may not be included with Life cover through super.

Which is better?

Well, it comes down to what you need, what you can afford, and the benefits or limits you require. If you've got an underlying medical condition, it's possible that you may consider life insurance through a life insurance provider to ensure you've got cover for it.

If you are looking for options around changing your cover amount as your life changes then insurance with a life insurance provider may provide this type of flexibility.

If you're not sure about the kind or level of cover you need, check out AAMI's Life Insurance comparison table. You can also use the Life Insurance calculator to work out how much cover you might need, or for further information give the AAMI Life Team a call on 13 22 44 (Monday to Friday, 8am – 6pm AEST).