Estimate how much monthly insurance premiums deducted from your super could reduce your balance by retirement, including lost earnings.
Premiums for cover through super come out of your balance, so their real cost includes the investment earnings that money would have made. Enter the combined monthly premium shown on your super statement or in the fund's online account, an assumed long-run return after fees, and the years until you expect to retire. Earnings in an accumulation account are taxed at up to 15%, applied here in a simplified way at the end.
Worked example (illustrative). $60 a month for 30 years at 7% a year: premiums total 360 × $60 = $21,600, but with forgone earnings the balance at retirement is about $73,200 lower. After a simplified 15% tax on the earnings part ($51,600 × 85% = $43,860), the reduction is about $65,500. The same $60 for 20 years reduces the balance by about $31,300 before tax.
Limits. Real premiums usually rise with age, so a flat figure understates the cost in later years, while switching cover off later would reduce it. Returns are not guaranteed. The model does not include the tax deduction the fund claims for premiums. The point is not that cover is too expensive: for many people with dependants or a mortgage it is the cheapest cover available. It is to make the cost visible so you hold the cover you need and drop duplicates. See the cost of insurance premiums in super.
Worked Examples and Checklists
Work out how life, TPD and income protection premiums deducted from super reduce your retirement balance, including lost earnings, with worked examples.
Costs, Cover Types and 2026 Rules
Compare cover through your super fund with retail life, TPD and income protection policies on cost, definitions, tax, underwriting and who receives the payout.
