Holding cover through super can be convenient and easy on your cash flow. Holding it outside super can give you broader cover. Many people use a mix.

Reviewed 31/10/2026. General information only, not personal advice.

Side by side

• Who pays the premiums: Inside super: Your super fund, from your balance. Outside super: You, from your own money (or your business)
• Effect on cash flow: Inside super: No out-of-pocket cost. Outside super: An ongoing personal cost
• Effect on retirement savings: Inside super: Premiums reduce your super balance. Outside super: No effect on super
• Cover types: Inside super: Life, TPD and income protection. Outside super: Life, TPD, income protection and trauma
• TPD definition: Inside super: Usually "any occupation". Outside super: "Own occupation" definitions are available
• Income protection: Inside super: Benefit periods and features can be more limited. Outside super: A wider range of benefit periods and features
• Getting the money: Inside super: Paid to the fund first, then released to you if you meet a condition of release. Outside super: Paid directly to you or your beneficiaries
• Tax on premiums: Inside super: Paid by the fund. Outside super: Income protection premiums are generally tax-deductible

Why people hold cover inside super

• Cash flow: premiums don't come out of your take-home pay
• Default cover: many funds give some cover automatically, often without health questions
• Group pricing: default cover can be cost-effective

Why people hold cover outside super

• Broader definitions: own-occupation TPD pays if you can't work in your own job, rather than any job you're suited for
• Trauma cover: only available outside super
• Control: benefits are paid directly, without the super release rules
• Protecting your super: premiums don't eat into your retirement savings

Before you change anything

• Don't cancel cover until new cover is in place. Your health may have changed since you first took it out.
• Check what you already have. Look at your fund statements for every account. Consolidating super can end cover in the accounts you close.
• Check the amounts. Default cover is often not enough to repay a mortgage or replace an income for long.

Insurance needs are personal. This page compares the structures generally and doesn't recommend any insurer or policy.

Weigh it up for your own situation

This page explains how the options generally compare. Which one suits you depends on your goals, balance, health, family and the rest of your finances. Book a free initial discussion or call 07 3733 1731. Meet face to face in Eight Mile Plains, or online anywhere in Australia.

Frequently asked questions

Can my insurance in super stop without me knowing?

It can. Under the law, funds generally must stop default cover if your account has had no contributions for 16 months, unless you've told the fund you want to keep it. Funds have to write to you first. Check with your fund if you're not sure.

Can I hold trauma insurance through super?

No. Since 2014, new trauma (critical illness) cover can't be held inside super. It can only be held outside super.

Are income protection premiums tax-deductible?

Premiums for income protection held outside super are generally tax-deductible. Premiums paid inside super are paid by the fund, so you can't claim them personally.

Related reading

• Insurance Advice
• Life, TPD, income protection and trauma explained
• Consolidating your super
• Industry vs retail super funds