Income protection insurance through super vs direct

Income protection insurance can give you peace of mind knowing you and your family can be protected if you're unable to work for a period of time. Whether it's due to sickness or injury, you could receive a percentage of your pre-tax income to help you stay on track financially while you recover.

Income protection insurance can be obtained through your super (some automatically provide income protection insurance) or you can choose your own insurance provider. 

Should you have income protection through super or arrange it through a direct insurer? 

There are both pros and cons in general with holding insurance through a super account or directly from an insurer. Weigh up the pros and cons of both options with this helpful information.

What is income protection insurance? 

Income protection insurance is a safeguard for you and your family against financial stress should you be unable to earn an income. You can take your time to recover from your sickness or injury with confidence, knowing you can use your benefit to help pay for daily expenses, such as your mortgage, school fees, and other expenses, if you're unable to work for a period of time.

Income protection insurance is a worthy consideration for anyone who relies on a steady income, and can be particularly helpful for self-employed people and small business owners who rely on a steady flow of income to meet their day-to-day expenses. 

For example, Real Income Protection Insurance can cover up to 70% of your pre-tax income, up to $15,000 per month. 

Direct income protection insurance with an insurer of your choice 

The benefits of obtaining income protection  insurance directly through an insurer include the following.


You have control to choose your insurer and select the benefit amount you prefer (subject to your circumstances) with direct income protection insurance. 

It’s good to keep in mind that you'll need to manually adjust your cover if your income rises or falls, and in some cases, you may be required to renew your policy based on these changes.


You may be able to customise features of your policy to suit you, such as your benefit period, and the waiting period, which can adjust the premiums due.   

Tax deductibility

If you take out income protection outside of your super, you can usually claim the premiums as deductions from your tax assessable income. Check first with your financial advisor or accountant to see if this applies to you.

Additional features 

Not only can you choose your waiting period and benefit period, but some direct income protection  insurance providers give you access to some additional features. This includes:

  1. Rehabilitation benefit: The direct policies may include (or have the option to add) features such as reimbursement of an additional amount to your income benefit each month you participate in a rehabilitation program, or they may reimburse toward costs to assist you to return to work.
  2. Final expenses benefit: If you pass away while covered, your family could receive cover for funeral costs or other final expenses. This may be included in the cover or able to be added as optional cover for an additional premium.
  3. Recurrent disability benefit: If your injury or sickness reoccurs within a certain period of time, usually a matter of within months of your last claim, it may be treated as a continuation of the previous claim, which means there won’t be an additional waiting period.

Income protection through super 

Income protection through super offers its own benefits, including the following: 


One of the potential advantages is you could get cheaper income protection insurance because super funds take out policies in bulk, which is known as a “group insurance policy”. It's usually offered through your employer's sponsored super plan as cover they've negotiated for you and their other employees. 

Pre-tax super contributions 

The premiums are covered by your pre-tax super contributions, so they could be cheaper than after-tax premiums, however, this can also reduce your super balance and savings at retirement.


Getting income protection insurance through super can be convenient. If your super is through an employer-sponsored fund, your level of coverage may automatically be adjusted as your income rises or falls, allowing you to stay protected without having to remember to update your cover level.


Claims through super-based income protection insurance are managed by the super fund.

The super fund manager will need to assess whether you meet the conditions of release before you're eligible for the income protection insurance benefit. 

The choice is yours 

Whether it is better to have income protection through your super fund or directly from an insurer of your choice, depends on your situation and needs. Speak with your financial advisor and consider your family's needs when choosing cover.

Income protection insurance could help protect you financially in the future. Find out more about the benefits of Real Income Protection Insurance

This is general information only and does not take into account your personal objectives, financial situation or needs. You should consider the relevant PDS available on this website prior to purchasing any product.