Australian group insurance can cut costs by 50%: study

As super fund members aged, their annual premiums for group insurance decreased.

Super fund members can save half on regular premium prices versus purchasing the similar offering online, a study showed.

A recent study conducted by Rainmaker Information in collaboration with Plan For Life revealed two key aspects: first, it compared the cost of buying age-based sum insured through a super fund versus direct purchase of MySuper automatic standard cover default insurance. 

Second, it evaluated the standardised price of insurance cover for death and total and permanent disability (TPD) cover for three standardised sum insured limits, comparing the average price of a super fund purchased voluntary top-up cover versus direct purchase.

At age 40, the price advantage of default super fund group insurance for death and TPD cover was 44%. 

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The annual savings from purchasing insurance through a super fund varied, with a 30-year-old saving around $150, and a 60-year-old saving as much as $680.

The study also highlighted that as super fund members aged, their annual premiums for group insurance decreased, while the cost of directly purchased life insurance increased significantly. 

For instance, a 25-year-old could save 46% or $100 in one year by opting for a sum insured of $100,000 through a super fund instead of purchasing it directly for $218. 

Similarly, a 50-year-old could save 30% or $240 with a sum insured of $500,000, and a 60-year-old could save 22% on the annual premiums for the same amount of coverage.