Insurance in super
Having insurance in your super is an easy way of helping ensure financial security for you and your loved ones if something happens to you.
Why insurance is important in super?
Superannuation primarily helps you to save for your retirement, but it can also serve an important purpose such as allowing you access to valuable insurance, often without the need for underwriting.
This is particularly important for people with pre-existing conditions, who may otherwise be charged much higher premiums or denied coverage altogether.
You may have access to several types of insurance in the Mercer Super Trust. While there are different types of coverage, they all share a common goal of wanting to provide financial security for you and your loved ones if something ever happens to you.
Benefits to insurance in super
In addition to helping provide financial security for you and your loved ones, there are other benefits to having insurance within your super account:
Premiums paid from super
Premiums are automatically paid from your super balance, so there’s no need to remember to pay them or factor them into your everyday budget.
Automatic and default cover
Automatic and default cover is often provided without the need for underwriting and health-related checks.
Get the right insurance cover
Although having insurance is an important first step, the key to financial security is ensuring you have a level of coverage appropriate for your personal circumstances. Unfortunately, research indicates that a significant number of Australians are currently underinsured.1
By taking steps to review and, if necessary, update your cover, you can enjoy peace of mind that you and your loved ones will be better looked after.
Mercer Tailored Super Plan default insurance offering
Wesfarmers have partnered with Mercer Super to provide you with great value superannuation and retirement benefits, as well as competitive insurance cover within Mercer Tailored Super (the Plan).
The Plan is specifically designed to be there every step of the way for Wesfarmers team members and their spouses, from the start of your career through to retirement.
Death or Terminal Illness & Total and Permanent Disablement (TPD) Cover
When you join the plan, you can opt into receiving basic insurance cover for Death (including Terminal Illness) and TPD without the need to provide evidence of good health (within the first 120 days).
Death or Terminal Illness
This cover provides a lump sum payment to your loved ones if you pass away. If you are diagnosed with a terminal illness, you can receive the lump sum payment early
Total and Permanent Disablement (TPD) Cover
This cover provides a lump sum payment to your loved ones if you pass away. If you are diagnosed with a terminal illness, you can receive the lump sum payment early
Calculating your Death or Terminal Illness and TPD cover.
You have a choice of 8 levels of basic cover.
The levels all refer to a percentage of salary for each year and complete month (each complete month counts as 1/12th of a year) from your date of death or TPD to age 65.
Your default cover is based on 20% of your salary multiplied by years of service up to age 65.
Level 1 |
5% |
Level 2 |
10% |
Level 3 |
15% |
Level 4 |
20% (Default) |
Level 5 |
25% |
Level 6 |
30% |
Level 7 |
35% |
Level 8 |
40% |
Hence, the default cover formula is:
(Salary x level %) x (future years of service to age 65)
Example 1 - Calculating Neil's default level of cover
Neil is exactly 40 years old (age 41 next birthday), with a salary of $100,000 a year and is a permanent employee – who takes default cover.Hence, his default cover amount is calculated as:
(20% x $100,000) x 25 years (the number of years to age 65) = $500,000.
If Neil were to die, become terminally ill or become totally and permanently disabled, Neil’s total super payout would be his super account balance plus his default cover amount of $500,000.
How much will your Death or Terminal Illness and TPD cover cost?
To calculate how much your cover will cost you, you have to look up your premium rate per age next birthday within the Death or Terminal Illness and TPD premium rate table (pg. 21).^
To work out your annual cost of cover:
- Look up your age next birthday in the left-hand column then
- Multiply the figure in the applicable right-hand column by your cover amount then
- Divide by 1,000.
Hence, the default cover formula is:
(Premium rate x total cover amount) ÷ 1,000
Example 2 – Calculating the cost of Neil’s basic cover
Using the same example of 40-year-old Neil, here’s how we calculate his annual cost of cover:We know that Neil’s age next birthday is 41. Looking at the premium rate table, his annual premium rate is 0.84 for every $1,000 of his total Death or Terminal Illness and TPD cover. Hence, the annual cost of Neil’s insurance cover is:
(0.84 x $500,000) ÷ 1,000 = $420.00
Dividing his annual cover of $420 by 12 months – he’ll be paying approximately $35 per month.
Check out the monthly cost of your insurance premium
The following tables provides an estimate of the monthly cost or premium a member would be paying – based on the default (20%) cover (see above example).
Estimated Monthly Premiums (Death and TPD)
You can generally apply to increase, adjust or opt out of your Death only or Death and TPD cover at any time so that your amount of cover remains right for your personal circumstances.
If you want more Death only or Death and TPD cover, you can increase your cover in two ways:
- Voluntary Insurance cover – underwriting required.
- Life Events cover – evidence of life event required.
The following table provides some estimated costs, based on an employee’s age and Death and TPD cover amount:
Estimated monthly premiums by age
The following table provides some estimated costs, based on an employee’s age and Death and TPD cover amount:
Apply for or review your insurance cover
You can check, update and apply for insurance cover in the insurance section of the Dashboard of your online account. If you’re thinking of updating your cover, we recommend seeking financial advice prior to making any changes.
Our Helpline Advice team can provide financial advice about your super fund at no additional cost. You can make an appointment with this team by calling our Helpline on 1800 682 525 between 8am-7pm (AEST/AEDT), Monday-Friday.
Determining the appropriate level of cover
The key to any type of insurance is ensuring that your level of cover is appropriate for your personal circumstances. Having too little could leave you and your loved ones struggling to make ends meet if something happens to you, whereas having too much could mean higher premiums needlessly drain your super balance, leaving you with a lower balance when you retire.
When it comes to how much cover you need, there is no ‘one-size fits all’ figure. Determining the amount of cover that’s appropriate for you requires you to take into consideration personal circumstances such as, but not limited to, annual income, dependent children, as well as any mortgages and other debts.
To help you determine how much cover you may need we’ve made available a calculator from one of our insurers, AIA Australia, which can take into account your circumstances to provide you with an idea of the level of cover you may need.
What if I have existing insurance cover?
We also offer members the option to transfer insurance they hold with another super fund into their Mercer Super Trust account. You can do this by completing the ‘Individual Insurance Transfer application’ form.
Please note that you should wait to receive written confirmation that your request to transfer your existing cover to your Mercer Super Trust account has been approved prior to rolling over your other super fund or cancelling your existing insurance.
Default insurance
Insurance coverage such as Death and TPD are often provided automatically when you open a Mercer Super Trust account as part of an employer plan. This coverage is provided without the need for you to go through underwriting. Although the coverage amount is typically based on factors such as age and income, it does not take into account any of your personal circumstances.
It’s important to note that this coverage may not automatically be applied to your account, as it is subject to the ‘Putting Members’ Interests First’ legislation outlined below, as well as other terms and conditions as outlined in the Product Disclosure Statement.
Rules relating to insurance within super
On 1 July 2019 the Australian Government passed a set of legislative reforms that were designed to ensure members’ balances weren’t eroded by premiums for cover they were either unaware of or didn’t require.
Protecting Your Super
Under the Protecting Your Super legislation, if your super account doesn’t receive any contributions or rollovers for 16 consecutive months we are required to cancel your cover unless you tell us otherwise. We will write to you prior to cancelling any cover, providing you the opportunity to retain it.
Putting Members’ Interests First
Under the Putting Members’ Interests First legislation super funds are unable to automatically place default cover on your account if you are under age 25 or have an account balance under $6000. If you are under age 25, or have an account balance under $6000 and would like default cover, please log in to your online account and complete the ‘Adjusting your insurance cover’ form located in the ‘Documents’ section.
Fact sheets
For more information about the automatic insurance cover offered through your super or exploring other insurance options that’s right for you, please refer to the fact sheet applicable to your Plan:
- Fact sheet: Insurance through participating employer Plans - Corporate Superannuation Division
- Fact sheet: Insurance for Mercer SmartSuper Plan - Individual Section
We’ve also put together some answers to these FAQs about insurance through your super.
Frequently asked questions
Below is a list of frequently asked questions to help you navigate the complex topic of insurance.
- View all
- |
- Close
*IMPORTANT Please note that any information in this material regarding legal, accounting or tax outcomes does not constitute legal advice or an accounting or tax opinion and prior to relying and acting on this information it is important that you seek independent advice from a qualified lawyer or accountant regarding this information.
1. Rice Warner - New research shows a large underinsurance gap
^To find your appropriate premium rate for your age, look up the Death and TPD premium rate table (page 21) in the Mercer Tailored Super Your Plan Fees and Benefits booklet
This document has been prepared and sent on behalf of Mercer Superannuation (Australia) Limited (‘Mercer Super’), ABN 79 004 717 533, Australian Financial Services Licence #235906, the trustee of the Mercer Super Trust ABN 19 905 422 981. Any advice contained in this document is of a general nature only, and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this document, you need to take into account your own financial circumstances. Please consider the Product Disclosure Statement, Product Guide, Insurance Guide, and Financial Services Guide before making a decision about the product, or seek professional advice from a licensed, or appropriately authorised financial adviser if you are unsure of what action to take. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917. Copyright 2024 Mercer LLC. All rights reserved.
* If you leave your Employer or you Exercise Choice, your super is automatically transferred to the Retained Benefits section and your insurance cover (if any) will continue. You will not be transferred to the Retained Benefits section if you die or your super is less than $500. For details of the insurance cover that will continue when you are transferred to the Retained Benefits section refer to the relevant Your Plan Fees and Benefits booklet and section 2.6 ‘Accumulation members transferring to the Retained Benefits section’ of the insurance booklet, where you can also find the terms and conditions (and exclusions) that will apply.
Cover is flexible and can be adjusted or opted out of at any time, although evidence of good health will need to be supplied if re-applying.
