Are you paying for insurance you can’t use? Will you get paid twice?

When 2 in 5* Australian’s have more than one super account, it’s safe to say you’ve probably doubled up on insurance too.

And in theory, this sounds like a great idea. You and your family will get a double payout if something happens to you. Bonus. Right?

But, unfortunately, it doesn’t always work that way.

Most people end up paying for insurance they can’t use. Paying twice for the same thing.

And it’s costing us thousands and shrinking our super balance. That’s money that could be paying for a better retirement life instead.

When it comes to insurance in super, it pays to read the fine print.

Let’s explore how it works.

Can you claim on insurance twice?

Can you claim multiple times? That is the big question.

Technically the answer is yes, you can claim on insurance twice. But in practice the answer is probably no.

It all comes down to your policy terms and conditions and if you can give valid reasons as to why you need to be insured for a large amount of money (i.e. twice the standard benefit).

Note: Every policy is different so make sure you read your PDS before making a decision.

Type Double payout What happens
Income Protection (pays you a monthly benefit if you can’t work) Unlikely You can only get paid a maximum of 75% of your salary regardless of how many policies you have. So, if you are paying for double income protection insurance it’s likely the insurers will battle it out for who pays what. But you’ll only ever receive 75% of your salary, and you’ll still have to wait out the time limits set in your policy.
Life Insurance Quite Possibly (if you can prove why you need a high sum insured) If the two policies are held by different insurers you have more chances of it being paid. Your estate will be asked to provide proof of why you needed that much insurance. And if they decide you’ve over-insured, you’ll only receive a recalculated amount.
Total Permanent Disability (TPD) (Pays a lump sum or monthly payment if you suffer from one of the list of defined injuries/disablement) Possibly, but up to benefit limits (it’s a grey area) It all depends on your insurer, the cover amount (you can’t be better off disabled than you were before the accident or sickness). For any claim, and especially TPD you need to meet the strict guidelines in the policy that defines particular-conditions. You may meet one policy definition but not the other. So, you’ll need to read the fine print.

How do you decide which Super to keep?

The type of insurance you choose to keep will always depend on what you need and what suits your personal circumstances.

If you’re unsure, talk to a professional adviser who can help you work it out. It’s always a good idea to arm yourself with the facts before you decide. Here are some questions to get you started.

1. Have you read the policy terms and conditions? Do you understand it?

Boring we know, but you need to know how your policy works and that means reading it.

2. How much insurance do you need to cover your life if something goes wrong?

What happens if you’re not around? Who can pay the mortgage? Who will look after kids if you have them? How will you pay for bills? And other living expenses?

There’s a great calculator on the Governments Money Smart site that can help you work out an estimate. Try it here.

3. Which insurance cover provides the better option for you?

When you know how much you need, it’s worth comparing policies to see what the better option for your situation is.

For example, one policy may have a higher sum insured than the other one. One fund may have higher or lower premium charges.

Other’s may have better benefit periods or terms. It’s definitely worth looking into and comparing the Product Disclosure Statements.

And if you’re switching to a new fund altogether, make sure you investigate the default insurance options in your new fund.

For example, with Fairvine Super we have included default insurance cover with the amount varying as you age. You won’t need to answer any questions to get new cover unless you need a higher insurance amount.

We have great rates with our insurer. We negotiated hard with our insurers because statistically, women have a lower risk profile than men.

It’s worth comparing.

4. Is your super account active?

If you haven’t paid any money into Super for a while, make sure you contact your super fund to let them know you still want it.

Take note: When taking out more than one policy, you must disclose to the life insurance company that you have coverage with another insurer, as well as the amount of cover you have.


Insurance Sorted.

Consider our Super, designed with Australian women in mind.

Women look after their health better and live longer. Your life insurance premium should reflect this. Ours does.

Find out more and make the switch today

Rebecca Cofrancesco (AKA.Beck)

As a natural born saver, talking about money is one of Beck's favourite things. With over 20 years of financial services work experience, she knows a thing or two about how it works too. Visit her website for more info here.

- Rebecca Cofrancesco