Retail Insurance

Retail insurance is a personal insurance policy held outside of superannuation, where you pay premiums directly to the insurer from your bank account using after-tax income. These policies are issued in your name and you have direct control over the policy, unlike super insurance where the super fund trustee owns the policy. Retail insurance generally provides more comprehensive coverage than super insurance, with broader definitions (particularly for TPD), more flexible policy structures, higher cover limits, and additional features and options. You can customize your cover to your specific needs, choosing waiting periods, benefit periods, and optional benefits. The underwriting is typically more thorough, potentially resulting in better premium rates for healthy individuals. Premiums for retail insurance are paid with after-tax dollars, meaning for a $2,000 annual premium, you need to earn approximately $2,857 (at 30% marginal tax rate) to pay it. However, income protection premiums are tax deductible, providing some tax benefit. Life, TPD, and trauma retail insurance premiums are generally not tax deductible. Benefits from retail policies are usually paid directly to you (or your beneficiaries), without super fund trustee involvement. Lump sum benefits are typically tax-free. The policy remains active regardless of employment status or super balance, providing continuity of cover. Retail insurance is portable - you can maintain it when changing jobs or circumstances.