Many people have life and disability insurance as part of their superannuation fund. This can be a convenient way to get cover, but there comes a time, especially as you approach retirement, when you might wonder if it’s worth keeping.

There’s no one-size-fits-all answer. The right decision will depend on your personal circumstances, your finances, and your stage of life. Still, there are some key points to think about before making any changes.

What is insurance in super?

Most super funds automatically include insurance for members. This can cover you if you pass away, become permanently disabled, or in some cases, if you can’t work temporarily due to illness or injury.

The premiums for this cover are paid directly from your super account. You don’t get a separate bill, which makes it easy to overlook how much it’s costing you over time.

Why you might consider cancelling

There are two main reasons people start thinking about cancelling their super insurance as they get older:

1. Premiums get more expensive – from your mid-50s onwards, the cost of cover often jumps significantly. This is because, statistically, you’re more likely to make a claim as you age.
2. You may no longer need it – by the time you’re close to retirement, your super balance and other assets may be large enough to support you (and your loved ones) without an insurance payout. In other words, you might be able to “self-insure.”

On top of that, most super funds stop offering cover somewhere between your mid-60s and age 70. So even if you keep it, you may only be able to hold it for a few more years.

Questions to ask yourself

Before deciding to cancel, think about the following:

• Could I or my family cope financially without this cover?
  If you passed away or became disabled, would your savings, investments, and other assets be enough to provide for your family or cover your living costs?
• How much am I paying in premiums?
  If the cost is eating up a big chunk of your super contributions, it could slow down the growth of your retirement savings.
• How is my super balance tracking?
  If your super is on track to comfortably meet your retirement needs, the insurance may be less critical.
• Do I still have debts or big financial commitments?
  If you still have a mortgage, business loans, or dependants relying on your income, you might want to keep some cover until those obligations are reduced or gone.

It’s not always all-or-nothing

You don’t have to completely cancel your cover. Many super funds allow you to reduce the amount of insurance you hold, which means your premiums will be lower.

For example:

• If you currently have $500,000 in life cover but only need $200,000 to clear debts and help your family, you could reduce your cover to match that amount.
• You could also remove certain types of cover you no longer need, such as income protection if you’re no longer working.

This approach can give you peace of mind while also protecting your retirement savings.

Seek advice before acting

Before making a decision, it’s a good idea to seek advice to help you:

• Assess whether you still need cover
• Work out the right level of cover for your needs
• Tailor your policy to suit your current circumstances

Final thoughts

The decision to keep or cancel your insurance in super is a balancing act between protecting yourself (and your family) and preserving your super for retirement.

If your financial position is strong and your debts are low, you might be comfortable reducing or cancelling your cover. If you still have big commitments or dependants to look after, it might be worth keeping at least some insurance until those needs are gone.

The key is to make a conscious choice – don’t just let your insurance keep running without checking if it’s still right for you.