New Laws to Protect Your Retirement Savings

Around 40% of working Australians claim they don’t have life insurance*. Yet, with 13.5 million insurance policies inside super*, it’s likely many people may have life insurance without knowing it*. 

The Bigger Picture

There’s a good chance, at some point in your career, you joined your employer’s default super plan – this is the plan your employer pays super into if you don’t nominate your own. Why? perhaps it was the easiest option for you when completing all your paperwork, or maybe it was the better deal.

Many employer default super plans also include insurance - something people may not realise they’re paying for. What’s more, many are disengaged with their super, or are unaware of the ins and outs of the fund they’re in. This means they may have multiple accounts – so may also be paying multiple sets of fees for super and insurances that mightn’t be right for them.

So, What’s Insurance Inside Super?

It’s insurance you pay for via your super account. There are different types of insurance offered in this way, including life insurance (or death cover), total and permanent disablement (TPD) cover, and temporary salary continuance (TSC) (also known as income protection).

Insurance is important, but it’s equally important to make sure the type and level of insurance you’re paying for suits your needs and circumstances.

To explore how much insurance you might need, use the AMP Insurance Calculator or speak to your TFC Financial adviser.

About The Super Laws

The federal government has introduced super laws to help prevent super balances from being eroded by fees, insurance costs for cover that people may not want or need.

Particularly, for:

  • young members

  • low account balances

  • super accounts that haven’t had a contribution for a long time

Insurance Cancellations

The new laws generally require insurance inside super to be cancelled if:

a member’s super balance doesn’t reach $6,000 between 1 November 2019 and 1 April 2020 and/orthe account doesn’t receive a contribution or rollover for 16 months,

unless the member tells their super fund that they’d like to keep their insurance.


from 1 April 2020, super funds must not provide insurance to new members aged under 25 or with an account balance below $6,000, unless the member requests it.

Learn more about Insurance Cancellations in AMP super accounts.

If the insurance inside a super account is cancelled because of these changes, the law requires the account to be transferred to the Australian Tax Office (ATO) if the balance is below $6,000 and no contributions or rollovers have been received for 16 months. Some exceptions apply, learn more.

A Checklist For What You Can Do

Your super savings are important, and so is insurance. Here are some steps you can take to understand your super and insurance better and make sure it’s working for you.

1. Check what you’ve got – have a look at your current super and insurance. Check the balance and how much you’re paying.

2. Find out if you have multiple super accounts – if you’re not sure whether you have other super accounts, an online search is a good way to find out. If you do find more super, you may want to consider consolidating it into a single account to make it easier to manage and possibly save on fees.

Search For Other Super

3. Before consolidating - check whether you have any insurance double ups – if you have more than one super account with the same type of insurance, you may be paying for insurance you don’t need. This is particularly relevant for TSC, where you’ll most likely only be able to claim up to 75% of your pre-disability income4, regardless of whether you have TSC cover within multiple super accounts.

Before you cancel your insurance or consolidate you accounts, carefully consider the features, benefits and costs for each. You can also talk to an adviser to make sure you’re making the right decision for you. Keep in mind that it can be difficult to reinstate insurance that’s cancelled.

4. Work out how much you need and what fits your lifestyle – it’s a good idea to speak to a financial adviser about this to make sure your personal circumstances are taken into account.

Explore how much insurance you might need

Find out more about reviewing your insurance

5. If you’ve heard your insurance might be cancelled – respond to your super fund accordingly if you want to keep it. Make sure you’re also across how the insurance cancellation will affect you and your loved ones before you decide.

6. Keep on top of it – life changes, which means our insurance needs change too. It’s a good idea to review your insurance needs alongside other major life changes like getting a new job, moving to a new house, or having kids. That way, your insurance can keep up with your life.

Of course if you have any questions that arise from this article our team at TFC Financial is happy to help. Please get in touch with us.

Insurance through superannuation, research 2016. Rice WarnerInsurance through superannuation, research 2016. Rice WarnerMetlife Insurance Inside Super Report 2018, page 10

* If you receive income from another source, like WorkCover, this will be offset against the 75% pre-disability income

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Toowoomba Financial Centre Pty Ltd ABN 88073088070, trading as TFC Financial is a corporate authorised representative of Charter Financial Planning Limited ABN 35 002 976 294 Australian Financial Services Licensee License number 234665. If you no longer wish to receive direct marketing from us you may opt out by calling us on 07 4639 1399. This article contains general advice only. You need to consider with your financial planner, your investment objectives, financial situation and your particular needs prior to making any strategy or product decision.


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