Is your Super Fund offering Life Insurance?

The Tax Office is reminding employers that, from 01 July 2008, employer-nominated super funds must offer minimum levels of life insurance death cover to members.

An employer-nominated super fund is the fund that an employer chooses to pay an employee’s super guarantee contributions to if the employee does not choose a fund (i.e., the default fund).

Employers will need to check that their employer-nominated super fund is a complying fund and offers the minimum insurance cover to satisfy the choice of super fund legislative requirements.

Insurance requirements

Employer-nominated super funds must offer minimum life insurance for members:

• at a premium of at least $0.50 per week for those aged under 56;
• with at least the level of insurance cover shown in the following table; or
• at least at a level of cover equivalent to the following table if the contributions are made to a defined benefit fund on behalf of a defined benefit member.

Age range Minimum level of life insurance cover
0 to 19 Nil
20 to 34 $50,000
35 to 39 $35,000
40 to 44 $20,000
45 to 49 $14,000
50 to 55 $  7,000
56 + Nil

Insurance exceptions

In some instances, employer-nominated super funds do not need to meet the life insurance requirements, such as where the employer:

• is making contributions under a federal award;
• arranges insurance cover for employees outside the super system that includes death cover at least equivalent to the minimum insurance requirements;
• is unable to obtain insurance from the fund normally used by an employer in respect of a particular employee due to the employee’s health, occupation or hours worked; or
• contributes to a fund whose governing rules were in place on 11 March 2005 and determined that an amount not less than $50,000 will be payable in respect of the death of an employee.

If an employer’s nominated super fund does not offer minimum life insurance for members, employers will need to arrange insurance either with another super fund of with an insurance provider.