Q&A: Insurance and retirement

Approaching retirement is a good time to review your financial situation. How does insurance fit into the picture?

By Mark Kelly - 3 min read

A little about Mark

Mark Kelly is responsible for the insurance products available to our members.

Holding life insurance can bring the confidence that you are protecting yourself against unexpected events, so you can continue to provide for yourself and your loved ones when it’s needed the most. If you’ve been holding life cover through your super fund throughout your working life, you’ll want to take this peace of mind with you into retirement. But there are some factors that affect life insurance when you retire. 

It’s important to note that this article does not apply to defined benefit arrangements – if you have a defined benefit arrangement, please call the helpline for more information on this topic. 

What happens to members’ insurance policies in super when they retire? 

As a super plan member, you have a number of options available when you retire, including starting an account-based pension or leaving your money in what’s known as the accumulation phase of super.

While insurance is a standard arrangement across all super funds in accumulation, there is no insurance attached to account-based pension accounts. Instead, you have the option, depending on your age, of leaving some funds in the accumulation phase so the insurance you have in that account can continue. 

You can have both an account-based pension account and an accumulation account in your super plan, so you can hold onto your insurance in the accumulation account and draw a pension at the same time. 

What factors should members be aware of if they’re continuing their insurance in their super with us?

If you don’t make a contribution into your super account with us for 16 months, the account becomes inactive, and prior to becoming inactive you would need to ‘opt in’ for your insurance to continue. 

You’ll also need to keep at least $6,000 in your super account to keep the account open.

Are there any age cut offs for continuing insurance coverage? 

There are cut-off ages, but that age will depend on which super plan you are in. Generally, it’s 65 but that’s not always the case. 
Always check what applies to you, by logging in to your account to see what you’ve got. Also, check the Insurance, Fees and Costs Guide (also available in your online account) and see what your own arrangements are. 

What about paying insurance premiums after retirement?

You have a choice of either leaving enough in your accumulation account when you move your money into a pension account to make sure there’s always going to be enough to cover premium payments, or you can top up your account as you go along. 

You can check the current premiums by referring to the Insurance, Fees and Costs Guide.

Premiums do change, so leave some buffer room if you’re not going to top up your account. You can continue to make after tax contributions to superannuation up to age 75. 

How do members know if they still need insurance after retirement? And how much? 

As you get older, insurance gets more expensive, or the coverage gets more limited. The broad idea is that as you age you should be relying less on insurance as protection against unexpected events and more on your own savings and accumulated super balance. Of course, everyone is different, so you should consider your own circumstances and decide what’s best for you.

How much insurance cover is enough? You can put your details into the insurance calculator to get an idea of how much insurance cover you or your dependants may need in the event of your death, or an injury or illness that leaves you incapable of working. 

If you are considering cancelling or changing your cover levels, be sure to review the terms and conditions of your current arrangement. Any subsequent application for new insurance cover or to increase existing cover may require evidence of health, and insurer approval. 

If you need more help, there are various advice options available from general information to comprehensive advice.

How do members find out if there are changes to their policy?

When you join a super plan, you will be provided with access to an Insurance, Fees and Costs Guide. It is highly recommended that you read this guide at that time. 

If the insurer is going to make a significant change to the policy after that—such as the underlying insurance arrangement or premiums—you will receive a letter in advance notifying you of the changes. 

Insurers don’t expect people to regularly check for changes, but you should have a look at the Insurance, Fees and Costs Guide every now and again to remind yourself of your coverage. 

Where can members get more information?

You can log in to your account to check your own arrangements, contact us, seek advice, or see our fact sheet for more information. 

---

Zest! recommends: 

---

Issued by Total Risk Management Pty Ltd ABN 62 008 644 353, AFSL 238790 (TRM) as trustee of Russell Investments Master Trust ABN 89 384 753 567. Nationwide Super and Resource Super are Divisions of the Russell Investments Master Trust. The Product Disclosure Statement (‘PDS’), the Target Market Determinations and the Financial Services Guide can be obtained by phoning 1800 555 667 or by visiting russellinvestments.com.au or for Nationwide Super by phoning 1800 025 241 or visiting nationwidesuper.com.au. Any potential investor should consider the latest PDS in deciding whether to acquire, or to continue to hold, an investment in any Russell Investments product. Russell Investments Financial Solutions Pty Ltd ABN 84 010 799 041, AFSL 229850 (RIFS) is the provider of MyTracker and the financial product advice provided by GoalTracker Plus. General financial product advice is provided by RIFS or Link Advice Pty Ltd (Link Advice) ABN 36 105 811 836, AFSL 258145. Limited personal financial product advice is provided by Link Advice with the exception of GoalTracker Plus advice, which is provided by RIFS. 

This communication provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. If you'd like personal advice, we can refer you to the appropriate person. This information has been compiled from sources considered to be reliable but is not guaranteed. Past performance is not a reliable indicator of future performance. To the extent permitted by law, no liability is accepted for any loss or damage as a result of reliance on this information. This material does not constitute professional advice or opinion and is not intended to be used as the basis for making an investment decision. This work is copyright 2023. Apart from any use permitted under the Copyright Act 1968, no part may be reproduced by any process, nor may any other exclusive right be exercised, without the permission of Russell Investments.