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

Mark Kelly

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. 


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