Insurance Inside vs Outside Super Calculator

Educational comparison only. Definitions vary by insurer — check PDS.

Trade-Offs in Plain English

Inside super suits cash-tight households — no hip-pocket cost today — but every $1,000 premium plus lost earnings reduces retirement balance, and default cover may be inadequate or any-occupation. Outside super preserves super and buys broader definitions (own-occupation TPD, agreed-value IP where available) but costs after-tax dollars now. Tax differs: super fund claims 15% deduction internally; outside, income protection is generally deductible to you while life/TPD is not. See our inside vs outside guide, IP vs TPD guide and why premiums change.

Advisers must compare at least 2–3 options, justify waiting/benefit periods and definitions for your occupation, and model premium impact on cash flow or super. Use this output to test that reasoning.

Stepped vs Level Premiums Over 20 Years

A 35-year-old with $500,000 life cover might pay $500 stepped versus $900 level in year one. By 55 stepped can exceed $2,500 while level sits near $1,100; by 65 the cumulative stepped bill often doubles level. Inside super, stepped is default and rises are deducted silently from balance — members notice only at statements. Outside super you can elect level and lock age pricing (inflation-indexed), valuable if you will hold to 60+. Ask for both projections in dollars to age 65, not just year-one quotes.

Occupation loadings, smoking, BMI and mental-health exclusions shift quotes more than structure. White-collar professionals may secure own-occupation TPD outside super unavailable inside. Manual workers face loadings that swamp structure savings — compare like-for-like definitions before comparing dollars.

TPD Definitions That Decide Claims

Own-occupation pays if you cannot work in your specific occupation, even if you could retrain. Any-occupation requires inability in any suited work — far stricter and the super-fund standard. Activities-of-daily-living or loss-of-limbs triggers are narrower still. Income protection adds waiting (30/90 days) and benefit periods (2 years to 65), plus partial-disability and super-continuation options. A cheaper inside-super policy on any-occupation with 90-day wait is not comparable to outside own-occupation with 30-day wait — normalise definitions first, then run this calculator for cost.

How to Challenge an Insurance Recommendation

Ask: which definition (any vs own occupation) applies and why for my job? What waiting/benefit period and why? What alternatives were quoted? How do premiums evolve (stepped vs level) and what is the 10-year cost inside vs outside? If the SOA lacks quotes comparison or premium projections, that is a best-interests gap — run an AdviserCheck review. For group cover inside super, check automatic acceptance limits, pre-existing exclusions on join, and whether salary continuance interacts with any income protection benefit period. AFCA data shows inappropriate advice and poor disclosure drive most advice disputes — keep quotes, PDS excerpts and file notes together for any complaint.

Frequently Asked Questions

Is inside super always cheaper?
No. Cash-flow cheaper today, but super-erosion plus weaker definitions can cost more long term.

Is income protection deductible outside super?
Generally yes where you pay and own the policy, at marginal rates. Fund-held IP gets 15% fund deduction instead.

Can I hold both?
Many hold basic inside plus top-up outside for definitions. SOA should model the blend, not double-count.

Is this advice?
No. Educational estimate. Check PDS/definitions and licensed advice.

What happens to group cover when I change jobs or consolidate super?
Group life/TPD inside super usually ceases on exit or rollover unless continued or replaced. Consolidating funds can extinguish valuable default cover and waiting-period credit. Before switching, compare replacement definitions, exclusions and premium loadings — s947D replacement warnings must appear in your SOA or ROA where products are replaced.