Flexi-Link Insurance Inside and Outside Super

If you’re looking for a way to reduce your insurance premiums while still benefiting from comprehensive coverage, then you might want to consider flexible policy linking. With Flexi-linking, you can optimise who pays for your insurance and the benefits you can access by having your policies split between the superannuation and non-superannuation environments.

Published September 16, 2019

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What is Flexi-linking?

Flexi-linking, also known as superlinking, provides you with the flexibility of how you structure your insurance. It allows you to connect two or more life insurance policies across different environments – inside and outside super. For example, you might want to link your personally owned trauma insurance policy (outside super) with the life cover you have inside your super fund.

Superlinking your insurance might help you take advantage of lower premium rates while providing features that aren’t available from policies held inside superannuation.

How does superlinking work?

With Flexi-linking, you split the ownership of your policies between the superannuation and non-superannuation environments. This makes it possible for you too, for example, link Trauma Insurance, held outside of super, with a death benefit and Any occupation TPD held inside your super fund.

Insurance inside super

When you purchase life insurance through your superannuation, the fund becomes the policy owner, and you need to meet both the policy’s claimable event and a condition of release before you can access an insurance payout. However, your premiums get paid through your fund, which might help you save money. On the other hand, Agreed value income protection, Own occupation TPD and trauma insurance are generally not available through super.

Insurance outside super

If you purchase life insurance outside the superannuation environment, you are the policy owner and pay the premiums from your own pocket. However, you’ll have access to features not available through super. A policy outside of super also generally has a more straightforward claim process.

flexible policy linking

Benefits of Flexi-linking your life insurance

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Possible disadvantages

You can generally have Super-link TPD Insurance and trauma cover. The concept of super linking income protection is where you split the ownership of your policy between self-owned and super owned.

Split ownership structure for TPD

split TPD

How does a split ownership structure affect your claim?

Should you claim under a split ownership policy, the insurance held inside super usually gets assessed first. For example, in the event of a TPD claim, the Any occupation TPD policy held inside superannuation is first evaluated. If you qualify for a TPD benefit under the super fund policy, the benefit is payable to the trustee of your fund.

However, if the trustee determines that your claim does not meet the conditions of release under the SIS law, your claim then gets assessed under the non-super policy based on an Own occupation TPD definition. If your claim gets approved, the lump sum amount is paid directly to you. The TPD cover under the super policy will then reduce to zero.

To determine whether Flexi-linking is a good option for you carefully consider the variables, like cost, taxation, the features included in the plan and where your benefit will be paid when you make a claim.

Contact an insurance broker to help you decide based on your specific requirements.

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