Key takeaways
- Life cover pays a lump sum on death; income protection replaces income if you cannot work; TPD covers permanent disability.
- Cover inside super is cheaper but reduces retirement balance and has different tax rules.
- How much you need depends on debts, dependants, and existing assets.
Life insurance is not one product — it is a family of covers that protect your household if you die, become disabled, or cannot work. Understanding the types helps you avoid gaps and double-ups.
On this page
Types of life insurance
Life cover, total and permanent disability (TPD), trauma (critical illness), and income protection each address different risks. Many Australians hold some cover through super without realising the details.
| Feature | Life | Income protection | TPD |
|---|---|---|---|
| Death benefit lump sum | |||
| Income if you cannot work | |||
| Payout if permanently disabled | |||
| Can be held inside super | |||
| Tax treatment varies | Varies | Varies | Varies |
General information only — not personal financial advice. Tax and super rules change; speak to a licensed adviser for your situation.
Inside super vs standalone
Super cover is often default and cheaper, but reduces your retirement balance when premiums are deducted. Standalone policies offer more control, broader definitions, and may suit higher cover needs.
How much cover do you need?
A common starting point: enough to clear debts, fund dependants' living costs for a defined period, and cover funeral expenses. Subtract existing assets and super death benefits. Needs change with mortgages, children, and divorce.
How to compare
Compare definitions (especially TPD 'own occupation' vs 'any occupation'), waiting periods for income protection, benefit periods, and exclusions. General information only — consider licensed advice for your situation.
Tip
General information only — not personal financial advice. Consider your own circumstances and read the Product Disclosure Statement (PDS) before purchasing any policy. Moneyhero may earn referral fees from some providers when you switch through us; this does not change how results are ordered. How we compare
Frequently asked questions
Life insurance fundamentals — product types, how premiums are calculated, and super vs standalone.
Do I already have life insurance through super?
Most super funds include default death and TPD cover. Log into your super account to check amounts, definitions, and beneficiaries.
What is income protection?
It replaces a portion of your income if illness or injury stops you working. Waiting periods and benefit periods vary — shorter waits cost more.
Is life insurance tax deductible?
Income protection premiums outside super are often tax deductible. Life and TPD premiums are generally not deductible when held personally. Rules vary — seek tax advice.
When should I review my cover?
After major life events: mortgage, children, marriage, divorce, or significant income changes.