Review Your Insurance Cover

Your superannuation may already include Total & Permanent Disability (TPD) insurance, income protection insurance, and life insurance, but the default cover inside many super funds is often far too low to support you and your family if you can no longer work.

Reviewing your cover helps you understand whether the protection you have is enough to replace your income, protect your home, and support your family.

A practical way to review your cover is to estimate the financial support your household would need if you could no longer work due to injury or illness.

Step 1 – Check What Cover You Already Have

Start by logging into your superannuation account or reviewing your latest super statement.

Look for:

• Total & Permanent Disability (TPD) insurance

• Income Protection insurance

• Life insurance

• The amount of cover provided

• The monthly premium cost

• Waiting periods and benefit limits

Many construction workers discover their default cover may only be $100,000 – $300,000, which may not be enough to support a family long term.

Step 2 – Calculate Your Financial Responsibilities

Estimate the debts and financial commitments that would still exist if you could no longer work.

Add together:

• Remaining mortgage or rent commitments

• Credit cards or personal loans

• Car loans or equipment finance

• Any other debts

Example:

Mortgage: $450,000

Car loan: $25,000

Total debt = $475,000

Step 3 – Estimate Your Household Living Costs

Consider how much your household needs each year to maintain your current standard of living.

Include:

• Groceries and food

• Utilities and household bills

• Transport costs

• Insurance

• School or childcare costs

• Day-to-day living expenses

Example:

Annual family living expenses = $70,000 per year

If financial support was required for 15 years:

$70,000 × 15 years = $1,050,000

Step 4 – Consider Future Costs

Future expenses can also be significant and should be considered.

These may include:

• Children’s education

• Medical expenses

• Inflation over time

• Home maintenance and repairs

Example:

Children’s education = $100,000

Step 5 – Estimate the Total Protection Needed

Add together your debts, household living costs, and future expenses.

Example calculation:

Mortgage & debts: $475,000

Family living expenses: $1,050,000

Future costs: $100,000

Estimated protection required = $1,625,000

This provides a general guide to the level of cover that may be needed to protect your family if your income stops.

Step 6 – Compare This With Your Current Cover

Once you estimate the protection your family may need, compare it with the insurance cover currently inside your superannuation.

If your cover appears significantly lower than what may be required, it may be worth reviewing your cover with a qualified financial adviser or insurance broker.

Paying Insurance Premiums Through Super (Salary Sacrifice)

Many workers are not aware that insurance premiums can sometimes be funded through their superannuation using salary sacrifice contributions.

Salary sacrifice means part of your pre-tax income is contributed into your super fund before tax is applied.

These contributions are typically taxed at 15% inside super, which can be lower than many workers’ marginal income tax rate. In some cases, this can make paying insurance premiums through super more tax-effective.

This approach may allow workers to maintain higher levels of protection while reducing the impact on their take-home pay.

Workers should always seek professional financial advice before making decisions about salary sacrifice or insurance arrangements.

Review Your Cover Regularly

Insurance needs change throughout life.

Major life events such as buying a home, starting a family, changing jobs, or increasing income can all affect how much protection may be required.

Reviewing your cover regularly can help ensure your financial safety net continues to protect your income, your assets, and your family.