Should I use my Superannuation to pay for Life Insurance?
Life insurance, TPD and Income protection can be paid via either superannuation rollovers, direct debit, or a combination of both. There are advantages to each, depending on your stage of life, priorities etc.
Having your superannuation pay the insurance premiums means it is often more competitive than via direct debit, and it’s not out of your pocket. Using a direct debit means you’re not impacting your Super, which is important to some.
The benefit in having a split (often recommended) is that should an incident occur during a time you’re not employed (i.e., a week’s break between two jobs for example), then Superannuation would not pay the claim, whereas having a portion of the coverage paid for via direct debit enables the claim to be honoured. A typical split is 95% superannuation / 5% direct debit.
Superannuation rollover is a term used to describe how your policy is paid via your Super. Essentially, you ‘open’ a new super account with the insurance provider, to capture the payment, and the amount is transferred from your Super to theirs. It does not mean you have two Super accounts, and you do not pay any fees for the providers Super, it is just how the payment is transferred and managed.