When Should You Cancel Insurance Inside Your Super?

Many Australians hold life insurance and disability cover inside their superannuation fund. It’s a simple and cost-effective way to get protection, but as retirement approaches, many people start to question whether it’s worth keeping.

What You Need to Know

There’s no universal answer. Whether you should keep or cancel insurance in super depends on your stage of life, financial situation, and family needs. Here are the key things to consider before making changes.

What Is Insurance in Superannuation?

Most super funds automatically include insurance for members. This usually covers:

• Life insurance (death cover): Pays a lump sum if you pass away.
• Total and Permanent Disability (TPD) insurance: Provides a payout if you become permanently disabled.
• Income protection (in some cases): Replaces part of your income if you can’t work temporarily due to illness or injury.

Premiums are deducted directly from your super balance, which makes payments convenient but can quietly reduce your retirement savings over time.

Why You Might Consider Cancelling Insurance in Super

As you move into your 50s and 60s, two big factors often trigger people to review their cover:

1. Premiums rise sharply – Insurance costs increase significantly with age, especially after your mid-50s. This is because the likelihood of claiming is higher.
2. You may no longer need it – By the time you’re close to retirement, your super balance, investments, and assets may be enough to provide for you and your family without relying on an insurance payout.

It’s also worth noting that most super funds stop offering cover between your mid-60s and 70.

Key Questions to Ask Before Cancelling

Before deciding whether to keep or cancel insurance in your superannuation, ask yourself:

• Would my family cope financially without it?
  If you passed away or became disabled, could your savings, super, and assets cover ongoing costs?
• How much am I paying in premiums?
  Are rising premiums eating into your super balance and slowing down your retirement growth?
• Is my super balance on track?
  If your retirement savings are strong, you may not need as much cover.
• Do I still have major financial commitments?
  A mortgage, loans, or dependants may justify keeping cover for longer.

Practical Considerations

Reducing Cover Instead of Cancelling

You don’t always have to cancel your super insurance completely. Many funds let you adjust your level of cover.

For example:

• Reduce your life cover from $500,000 to $200,000 if you only need enough to clear debts.
• Remove income protection if you’ve already retired or no longer rely on wages.

This approach can lower your premiums while still providing peace of mind.

The Importance of Financial Advice

Before making changes to your insurance inside super, it’s wise to seek professional financial advice. An adviser can:

• Review whether you still need cover.
• Calculate the right level of protection.
• Help tailor your policy to match your retirement goals.

Final Thoughts

Deciding when to cancel insurance in your superannuation fund is a balancing act. On one hand, insurance protects you and your family. On the other, high premiums can reduce your retirement nest egg.

If your debts are low and your financial position is strong, reducing or cancelling may make sense. If you still have dependants or significant commitments, keeping some cover could be worthwhile.

The key is to review your situation regularly and make an active decision, rather than letting cover continue automatically. Reach out if you need guidance to help you with this important decision.

Tommy Li, CA

Director, Verity Advisory  |  Registered Tax Agent  |  Authorised Financial Adviser (ASIC Rep No. 1261831)  |  Member, Chartered Accountants Australia & New Zealand

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Tommy is a Chartered Accountant with 20+ years advising medical professionals on tax, financial structure and practice ownership decisions. He founded Verity Advisory to provide integrated advice for doctors at career-defining financial inflection points — combining tax, lending and financial planning into a single structured approach.