Relying on Income Protection from Your Super Fund? Why It Might Pay You $0 Even If You Can't Work

⚠️ The "2-Year" Trap: Most default Income Protection in Super funds is capped at a 2-year benefit period. If you are permanently disabled, your payments will stop just when you need them most.

💼 The Surgeon vs. The Telemarketer

Imagine you are a surgeon earning $300,000 a year. You injure your hand in a car accident and can no longer hold a scalpel. You cannot perform surgery ever again.

You file a claim with your Super fund's Income Protection policy. You receive payments for 2 years.

Then, the letter arrives: "Benefits Ceased."

Why? Because many Super policies switch to an "Any Occupation" definition after 24 months. The insurer argues: "Your hand is hurt, but you can still talk. You are qualified to work in a call centre for $60,000 a year. Therefore, you are no longer disabled."

"Any" Occupation vs. "Own" Occupation

This one distinction defines the quality of your cover. In Australia, the difference between a "Default" policy and a "Retail" policy is massive.

Relying on Income Protection from Your Super Fund?

🔍 The Definitions

• Any Occupation (Super Risk): Often kicks in after 2 years. You only get paid if you cannot do ANY job suited to your education, training, or experience. The bar is set very high to stop claims.
• Own Occupation (Retail Standard): Available in standalone policies. You get paid if you cannot do YOUR SPECIFIC job. Even if you could technically flip burgers or answer phones, the insurer pays you because you can't perform your actual profession (e.g., Surgery, Carpentry, Engineering) until age 65.

Super vs. Private (The Comparison)

It’s not just about the definition. Super policies often have other limitations compared to a Retail policy you buy through a financial adviser.

Feature	Super Fund (Default)	Private Policy (Retail)
Benefit Period	Usually capped at 2 years.	Can pay until Age 65.
Claim Definition	Often switches to "Any Occupation" after 2 years.	Stays "Own Occupation" for the entire claim.
Tax Deduction	Fund gets the deduction (15% tax environment).	You claim it personally (Marginal Tax Rate, e.g., 32-47%).

Chief Editor’s Verdict

If you are young, single, and working an entry-level job, the default Super cover might be enough. It is cheap, automatic, and covers short-term illnesses.

However, if you are a specialized professional, a tradesperson, or the breadwinner for a family, relying solely on Super insurance is a gamble. You are paying premiums for a policy that will cut you off after 2 years or force you into a lower-paying career. Speak to a financial adviser to upgrade to a proper "Own Occupation" policy to age 65.

[General Advice Warning & Legal Disclaimer]
The information provided in this article is for general educational purposes only and does not constitute personal financial advice. Insurance definitions inside Superannuation funds (e.g., AustralianSuper, Hostplus, REST) vary significantly. Always read the Product Disclosure Statement (PDS) and Target Market Determination (TMD). Tax rules regarding insurance deductibility are complex. Always consult with a qualified Financial Adviser before cancelling or changing your insurance.