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.
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:
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:
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:
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:
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:
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.