Goldsborough Group Financial Services director John Oliver in his office. Picture: Prokopec Alice Source: News Limited

The price of protecting your family financially from death or disability varies widely depending on age, risk factors and level of cover, and holding it within a superannuation fund is generally cheaper despite super insurance premiums climbing 30 per cent in the past three years.

Most healthy people with young families can get $1 million of death and disability cover for less than $25 a week in super, and income protection cover that pays a percentage of your wage if you are unable to work.

If you have a lot of little super funds, chances are you have lots of little attached insurance policies, but experts say don’t rush to close them until you know you have enough cover or can get it elsewhere.

Goldsborough Financial Services director and adviser John Oliver says Australia has a “massive underinsurance problem”.

“Too many people think they have got insurance within their super fund and it might be $50,000, and they think that’s enough without sitting down and analysing how much they need,” he says.

Work out your needs using one of many free online calculators that take into account factors such as repaying debts, children’s education and replacing a dead or disabled spouse’s wage.

The younger you take out insurance the better, because you are generally healthier, and within super it’s usually cheaper, Oliver says.

“Why wouldn’t you have it in your super fund? The premiums come out of investment returns or contributions, rather than coming out of your pocket with a stand-alone policy.”

AMP financial adviser Darren James says “it’s not as much as a given anymore” that life insurance is cheaper in super, but it does have tax benefits that stand-alone policies don’t.

“You can salary sacrifice or make tax-deductible contributions to pay for it,” he says.

“Look at your situation now. If something happened can you or your family manage financially? If you can, you don’t need the cover. If you can’t, you do.”

FOLLOW US ON TWITTER

MONEYSAVERHQ

ANTHONY KEANE