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%.
Superannuation fees have fallen 2% over the last financial year to reach to 0.93% per annum, the lowest total expense ratio on record.
Australia’s financial adviser numbers have stabilised at 16,000 and is projected to climb, but this may not be enough to avert a supply shortfall.