MERLIN RISK WIZ. • INSURANCE GUIDE
Protecting What Matters Most.
Most Australians have some insurance — but not necessarily the right insurance. This guide breaks down what each cover type actually does, who it's for, and what it costs — so you can make confident decisions about protecting your family, your income, and your way of life.
1 in 3
Australians will suffer a critical illness before retirement
31%
hold income protection, yet it's the most valuable asset to protect
96%
of life insurance claims accepted in Australia in 2024
WHY INSURANCE MATTERS
The one thing you can count on is that life won't always go to plan.
Think about what you'd lose if things went wrong. Your mortgage still needs paying. Your kids still need feeding. Your family still needs a roof over their heads. Insurance is what keeps all of that intact — even when everything else is falling apart.
The good news? Most claims in Australia are paid without dispute. The APRA/ASIC data shows that between 92% and 96% of life insurance claims are accepted each year. The challenge isn't the insurance industry — it's making sure you have the right cover, in the right amount, structured the right way.
You may think your existing insurance inside super is enough. It might not be.
Default cover through super is a great starting point, but it's designed to be generic. It rarely accounts for your actual mortgage, your family's lifestyle, your income level, or any business interests. A proper review almost always finds gaps — and sometimes significant ones.
THE ESSENTIALS OF PERSONAL COVER
There's no one-size-fits-all.
Here's what's available — and who needs it.
Personal insurance comes in five core types. Most Australians need a combination of several, depending on their life stage, income, debts, and dependants. Tap each cover to read more.
A lump sum gift to the ones you love. If you pass away or diagnosed with a terminal illness, life cover pays a lump sum - helping clear debts, cover funeral costs, and keep your family's life on track. - Debts and mortgage - Funeral and estate costs - Family lifesyle
When you can never work again. Total & Permanent Disability (TPD) cover pays a lump sum if illness or injury means you can't return to work. Covers rehab, medical bills, and day-to-day living so you can focus on recovery - not money. - Any & own occupation cover - home care
Keep the income flowing, whatever happens. If you're too sick or injured to work, income protection replaces up to 70 % of your salary. Choose your waiting period (30-90 days or longer) and benefit period (2 years to age 65 where available). Premiums are usually tax-deductible. Essential for self-employed and primary earners. - up to 70% of salary - tax deductible - self employed
Cash when a diagnosis hits hardest. Cancer, stroke, heart attack — trauma cover pays a lump sum right after diagnosis. No waiting to get better before you can pay the bills. You can also add child trauma cover for extra peace of mind. - cancer, stroke, heart attack - child cover add-on
Keep the lights on when you can't be there. Running your own business? If you're out of action due to illness or injury, this cover keeps your business ticking — rent, utilities, accountant fees and more. Consider also insuring key staff and business partners whose absence could be costly. - rent and utilities - staff cover - partner protection
UNDERSTANDING WHAT YOU PAY
What shapes your premium?
Insurance isn't priced at a flat rate — it's calculated based on your personal risk profile.
Understanding what drives your premium helps you make smarter choices about how to structure your cover.
Insurance premiums vary, based on:
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Age & Gender
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Cover type & amount
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Health and medical history
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Occupation
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Smoking status
And how your premiums are structured:
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Stepped premiums start lower and increase with age
-
Variable premiums cost more early on but remain more stable over time
POLICY OWNERSHIP
Personal name or inside super?
The trade-offs matter.
Most types of insurance can be held either in your own name or within your superannuation fund. Each has genuine advantages — and the right choice depends on your cash flow, tax position, and cover requirements.
Policy in Personal Name
Premiums paid from
-
After-tax personal income
Tax deductibility
-
Usually, income protection premiums only
Claim payout
-
Often tax-free (except IP payments, which are taxable income)
Best for
-
More tailored cover, broader benefit definitions, immediate claim access
And how your premiums are structured:
Premiums paid from
-
Super contributions or existing balance
Tax deductibility
-
Deductible to the super fund (reduces fund tax)
Claim payout
-
May be subject to tax and superannuation release conditions
Best for
-
People with limited cash flow; note: reduces retirement balance over time
Note: income protection held inside super may also be subject to a "condition of release" — meaning if you aren't gainfully employed at the time of the claim, the super fund may not be able to pay out, even if the insurer would otherwise have paid. This is one reason many people choose to hold income protection in their personal name.
APPLYING FOR COVER
What to expect when you apply.
Getting insurance requires a health and lifestyle assessment — don't let this put you off.
The vast majority of people are accepted on standard terms. Being well-prepared makes the process much smoother.
How applications are assessed
When you apply, you'll complete a health questionnaire covering your medical history, lifestyle, occupation, and any existing conditions. Depending on the cover amount and your health, the insurer may request a medical exam, blood tests, or GP reports. Honesty at this stage is essential — non-disclosure can void your policy at claim time, even years later.
Based on the assessment, one of three outcomes is typical:
Standard cover accepted
Your application is approved at standard rates, with no additional conditions. This is the most common outcome.
Premium loading applied
Cover is offered, but at a higher premium due to a health condition, occupation, or lifestyle factor. The loading may reduce or be removed if your circumstances change.
Exclusion applied
Cover is offered, but a specific condition (e.g. a pre-existing back injury) is excluded from claims. This is still meaningful cover — everything else remains protected.
Once accepted, most policies are guaranteed renewable — meaning your insurer cannot cancel or refuse to renew your cover because your health changes. This is one of the most valuable features of personal insurance, and a strong reason to get cover in place while you're still healthy.
WHEN TO REVIEW YOUR COVER
Life changes fast.
Your insurance should too.
Your insurance needs aren't static. A policy that was right for you three years ago may leave you underinsured today.
These life events are all signals to review your cover — and often to increase it.
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Buying or refinancing a home
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Having a baby or growing your family
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Getting married or de facto
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Significant income increase
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Children starting private school
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Starting or buying a business
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Divorce or separation
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Ageing parents becoming dependant
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New health diagnosis
As a rule of thumb, review your cover annually or bi-annually and any time you experience a major life change. An adviser who knows your situation can make this quick and straightforward.
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