Group Cover Versus Retail Cover

Group Insurance is a pooled insurance product offered by a Superfund or employer to a group of people. The agreement is between one owner (the trustee of a Superfund or an employer) and the insurer. Often, people will hold a default level of group cover via their industry superannuation fund.

 Retail Insurance is an individual insurance product offered by an insurer to the life insured and policies are channelled via intermediaries such as financial advisers or comparison websites. The application process involves underwriting – an assessment of risk of the life to be insured, which involves a medical component (personal / family history, potential collection of bloods etc) and/or financial component (proof of income etc).


Group Insurance Cover Advantages Retail Insurance Cover Advantages
·         Reasonably cheap premiums when compared with Retail cover.

·         Persons who may not be able to obtain individual cover, or have an exclusion or loading applied, are able to access a level of cover.

·         The application process generally very simple and straightforward.

·         Underwriting not normally required (up to automatic acceptance levels).


·         Policy terms are ‘locked’ (not subject to change) at time policy goes ‘In Force’.

·         Comprehensive (more ‘generous’) policy terms.

·         You are generally able to insure larger sums (maximums – life – unlimited / TPD – $5m / Trauma – $2m)

·         Cover levels (benefits) are fixed (or can increased with CPI / other indexation)

·         Flexible premium structures (Stepped / Level) – to cater for short & long-term insurance needs.

·         Flexible policy options (e.g. Income Protection contracts – more options available for waiting / benefit periods, Agreed / Indemnity cover etc)

·         Able to appoint a servicing adviser.

·         You can elect to structure premiums inside and outside of superannuation (called super-linking) to maximise feature, benefits and tax deductibility of premiums.


Group Insurance Cover Disadvantages Retail Insurance Cover Disadvantages
·         Variability of policy terms & conditions – T&Cs can be changed at any time upon agreement between the trustee / employer and the insurer and can apply to existing policy holders, not just new policy holders

·         Strength of policy is usually weaker as cover definitions are less comprehensive than retail cover policies.

·         Generally lower maximum sums insured.

·         Normally cover is unitised meaning cover will decrease as the life insured ages.

·         Typically, only ‘Stepped’ type premium structure available (i.e. cheaper during initial years but increases substantially over time)

·         Less flexibility with policy options (e.g. Income Protection contracts – restrictive waiting / benefit periods)

·         Unable to appoint a servicing adviser (a servicing adviser can assist & support with the application process, policy queries, claims management).

·         As with retail cover funded from superannuation, you will need to meet the superannuation trustee’s condition of release to access benefits in addition to the policy terms.


·         Generally, retail policies are more expensive than group policies (but reflective of a better-quality product)

·         A more detailed application process (can take 4-6 week to finalise)

·         Underwriting (medical / financial) potentially required.

·         Based upon underwriting outcomes, you may be offered alternative terms, loadings or exclusions depending on your health history or may be decline cover.

·         As the sums insured does not decline with age, stepped premiums can increase significantly with age, affecting the long-term affordability of retail cover premiums.