What is superlinked life insurance?
Superlink is an option for Aussies who want more flexibility around their life insurance premium payments. This guide covers all you need to know.
by Gary Andrews
Last update 15 Mar 2021
Superlink is a way of 'linking' policies inside and outside your super fund, It can be a handy option if you want more flexibility in how you pay for your life insurance premiums as it cuts down on immediate out-of-pocket expenses.
But there are also restrictions on the type of cover that can be held within super, as well as the conditions you have to satisfy to make a successful claim.
This guide covers everything you need to know about how superlinking works, including restrictions, advantages and disadvantages.
Superlink -- which you may hear referred to occasionally as flexilink -- allows you to split your retail life insurance policies with a portion that sits inside your super fund and the remainder outside of your super fund. This remainder is paid for out of your own pocket.
Superlinking can only be done with two types of life insurance:
Some common reasons people choose to superlink their policies include:
To understand how payouts work with superlinking policies, we'll need to dive a little bit deeper into some definitions of Total and Permanent Disability cover.
There are two primary definitions for TPD:
Funding a TPD policy solely through your super fund will only allow you access to the Any Occupation definition. This is because Own Occupation isn't available inside your super fund.
But superlinking your TPD cover and paying a portion of the premium out of pocket means you're eligible for both Any Occupation and Own Occupation.
Let's look at an example to illustrate the difference between the two.
A mechanic has an accident that requires their arm to be amputated. Under Own Occupation, they're likely to be entitled to a benefit payout because they can no longer perform their day-to-day work as a mechanic.
But under Any Occupation they may not get a benefit payout. Our example may no longer be able to work as a mechanic. But their insurer may decide they can work in another job based on their education, training or experience.
Granted, not many of us will be losing arms. But this should help you see the difference between Any and Own Occupation and how it may affect the likelihood of receiving a benefit payout depending on which policy you hold.
There's a number of benefits to a superlinked policy that some people may find useful.
While superlink has a lot of benefits, there are also some downsides. Not everybody will want to superlink their policy and it can pay to compare different types of life insurance to see what's best for you.
The main drawbacks of superlinking are:
If you need to make a claim under a superlinked policy, the insurance held inside your super will typically be assessed first. Any claims not payable through your super will then usually be assessed by the policy that you have outside of super.
This may sound confusing, but it's because whoever administers your super fund makes the decision on whether to release funds or not. If you've ever tried to access your superannuation early, you'll know that there's some very stringent release criteria!
In contrast, any life insurance policies held outside your super don't have the same restrictions.
So if you superlink your policy and your super provider decides your claim doesn't meet the conditions of release from your super fund, then the total amount may be paid directly to you via your insurance held outside super.
With Compare Club you can compare policies from 11 of Australia's leading life insurers, all in one place. It's a fast, simple way to compare your options and choose a policy that's right for you. You know you want life insurance---that's an easy decision. The next step is where it can get a little bit confusing, because you'll need to pick which type of policy to buy: direct, advised, or group insurance?COMPARE & SAVE
This guide is of an informative nature only and not representative of Compare Club products. It should not be taken as medical or financial advice. Check with a financial professional before making any decisions.