Group insurance is life, TPD, income protection, or trauma coverage provided to multiple people under a single master policy, typically through employers or superannuation funds. It offers simplified acceptance and lower premiums through group discounts, but may provide less comprehensive coverage than retail policies.
Group insurance provides life, TPD, income protection, and sometimes trauma cover to groups of people under a single master policy, most commonly through employers or superannuation funds.
The insurance is underwritten collectively rather than individually, so default cover usually comes with no medical questions.
Group insurance offers several practical benefits:
Most Australian superannuation funds provide default group insurance to members, offering basic life and TPD insurance (and often income protection) automatically on joining.
Employers may also arrange group insurance for employees as a workplace benefit, separate from super.
Group insurance has trade-offs compared to retail (individual) policies:
Group insurance premiums are calculated on the average risk of the group rather than individual risk profiles. Younger and healthier members may subsidise older or less healthy members.
For super-based group insurance, premiums are deducted from your super balance, eroding retirement savings over time.
APRA regulates group insurance through superannuation funds. Recent reforms have improved:
Group insurance is most suitable as baseline protection, often supplemented with retail insurance for comprehensive coverage.
Marcus, 32, automatically receives $200,000 life insurance and $100,000 TPD through his industry super fund's default group insurance, without medical underwriting or active application
Sarah works for a large corporation offering group life insurance of 3x salary. Her $250,000 coverage through work costs nothing in premiums but ceases if she leaves the company, so she supplements with retail insurance
David, 45, has $300,000 life cover through his super fund's group policy. When diagnosed with diabetes, he can't increase coverage without medical underwriting, highlighting the importance of reviewing coverage while healthy
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