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These savings are observed when compared to buying similar life insurance directly online, according to a recent study conducted by Rainmaker Information in collaboration with Plan For Life.
"The study confirmed that super fund group insurance provides a cost-effective option for fund members across all age groups and coverage needs,” said Alex Dunnin, executive director of research and compliance at Rainmaker Information.
The study consisted of two core elements:
At age 40, the price advantage of default super fund group insurance for death and TPD cover was 44%.
Annual savings in buying this insurance through a super fund were found to range from $150 for a 30-year-old, going as high as $680 for a 60-year-old.
Annual premiums for group insurance decreased for super fund members as they aged, however the cost of directly purchased life insurance increased significantly.
For a sum insured of $100,000, a 25-year-old super fund member would pay an annual premium of $118, whereas purchasing equivalent life insurance directly would cost $218, resulting in a saving of 46%, or $100 in just one year.
A 50-year-old would pay premiums as high as $840 for direct insurance, while super fund group insurance would cost an average of $600, representing a saving of 30% or $240.
“For a larger sum insured of $500,000, the difference in premiums gets higher in dollar terms,” said Dunnin.
A 25-year-old would pay 37% more in direct insurance annual premiums. The difference in annual premiums was found to be at its minimum for a 50-year-old at 8% but for a 60-year-old the gap climbed to 22%.
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Total risk market inflows were down a marginal 0.6% over the year to June 2024, decreasing from $18.3 billion to $18.2 billion.
Dual access ETPs, which are transacted both on stock exchanges and off-market through funds managers, can cost four times as much as the rest of the Australian ETP market.
