Insurance & your super
Protect you & your loved ones
What is super insurance?
Taking out insurance through your super can be a good way to protect your income and prepare for the future. As a Crescent Wealth member you receive protection if you die or become ill or injured.
Eligible Crescent Wealth members can also receive age-based death, total & permanent disability (TPD) and income protection cover. (See details below.) As you grow older, age-based cover is tailored to give you a minimum amount of cover as your needs change.
You can check if you have insurance cover with us by logging in to your account online. There, you can also see how much you pay for your cover.
We offer three types of life insurance for our members:
- Life cover: pays a lump sum or income stream to your beneficiaries.
when you die or if you have a terminal illness.
- TPD insurance: pays you a benefit if you become seriously disabled and are unlikely to work again.
- Income protection insurance: pays you a regular income for a specified period (this could be for two years, five years or up to a certain age) if you can't work due to temporary disability or illness.
At Crescent Wealth, we automatically provide members with life cover, TPD insurance, and income protection insurance. This insurance is for a specified amount and is generally available without medical checks.
TPD insurance cover in super usually ends at age 65. Life cover usually ends at age 70. Outside of super, cover generally continues so long as you pay the premiums.
At Crescent Wealth, please make an informed decision that is in your best interests. So, we are open and transparent about the pros and cons of taking out insurance in your super. Here are some things you should consider:
- Cheaper premiums
Crescent Wealth premiums can be cheaper because we purchase insurance policies in bulk.
We automatically deduct insurance premiums from your super balance.
- Fewer health checks
We will accept you for a default level of coverage without health checks. So, if you work in a high-risk job or have health conditions that can make it difficult to get insurance outside the super, this can be useful. Check our product disclosure statement to see our exclusions and treatment of pre-existing conditions.
- Extra cover
If you answer some questions about your medical history and do a medical check, you can usually increase the amount of coverage you have above the default level.
- Tax benefits
Your employer's super contributions and salary sacrifice contributions are taxed at 15%. This is lower than the marginal tax rate for most people. This means paying for insurance through your Crescent Wealth super can be tax-effective.
- Limited cover
Different insurance policies offer different amounts of cover. So the cover you receive in Crescent Wealth super could be lower than the cover you can get outside super. Default insurance through super isn't specific to your circumstance and some eligibility requirements may apply.
- Cover can end
Your cover may end if you switch super funds, your contributions stop or your super account becomes inactive. So, if you change funds, you must ensure you remain insured.
- Insurance is paid for via your super balance.
Like all super funds, Crescent Wealth will deduct your insurance premiums from your super, which reduces your savings balance.
Crescent Wealth will not provide insurance if you're a new super fund member aged under 25, or your account balance is under $6,000 unless you:
- Contact us to request insurance through your super
- Work in a dangerous job and we choose to give you automatic cover (you can contact us to cancel this cover if you don't want it).
If you already have insurance and your balance falls below $6,000, you usually won't lose your insurance as a result.
Is super insurance Shariah-compliant?
Islamic scholars and Australian Muslims have long debated this question. So, we’ve dedicated the rest of this web page to give you a balanced, impartial guide to the issue.
To tackle the big question of whether insurance for Muslims is Shariah-compliant, we need to understand some central concepts: riba, gharar, maysir, and takaful.
The concept of riba (or ursury) translates into English as interest (that is: lending money, then being repaid a greater amount at a later date). The Koran is quite straightforward on the concept of acquiring interest: it is not Shariah-compliant.
While riba is clearly forbidden under Islamic law, this does not answer the question of whether insurance constitutes interest. To answer that question, we need to examine the other concepts.
Derived from the hadiths, gharar is a concept that relates to the English concepts of uncertainty, deception, and risk.
Gharar is best summed up in the words of the 20th Century Islamic scholar Abd al-Aziz ibn Baz, who said: “Do not sell that which you do not possess”. Traditionally, gharar was used to forbid activities such as selling crops that had not yet harvested, or unborn animals.
When you take out insurance on a car, a home, or a business, you are doing so because you are uncertain about how future risks may affect those things. So, it is easy to see how insurance constitutes “uncertainty”. But the application of this Islamic concept to modern insurance is not completely clear.
Maysir relates to the English concept of gambling. Muslim scholar Faleel Jamaldeen defines Maysir as “the acquisition of wealth by chance (not by effort)” (Islamic Finance for Dummies, 2012).
Maysir is prohibited under Islamic law because a person may gain benefit from something without any effort on their part. In the Koran (5:90-91), Maysir is grouped with alcohol as not Shariah-compliant because both of them “arouse discord and hatred among you” and also “deter you from the mention of God and prayer”.
This latter reference may be less relevant to the practice of buying and selling insurance. The former reference is less clear but arguably, insurance does not represent the acquisition of wealth but rather the restoration of something that has been lost.
Takaful is an Islamic concept that provides strong support for at least some insurance. Takaful roughly translates into English as “solidarity”. But it has a much more precise meaning in the context of Islamic law.
The concept of takaful is that members of a community contribute to a common fund, which can then be used to reimburse community members who experience some loss. For example, the group may pay to have a member’s house rebuilt if destroyed in a fire.
In this way, takaful is very much a kind of insurance that is halal under Islamic law.
The scriptural basis of takaful is found in both the hadiths as well as the Koran, where the evidence is usually derived from verse 5:2: “And cooperate in righteousness and piety, but do not cooperate in sin and aggression.”
Therefore, the moral basis of takaful is in community cooperation, including the principles of charity and compassion.
Both sides of the debate
Having considered the above four concepts, there are two interpretations of insurance that you might consider.
On the against side of the debate, there is clear scriptural and scholarly instruction that modern insurance practices are not Shariah-compliant. Namely, insurance implies some form of usury (riba), uncertainty (gharar), and gambling (maysir).
Although the ancient scriptures of Islam do not speak of modern financial practices directly, the argument against insurance is based upon broader moral principles.
Therefore, many financial institutions may well offer insurance products that are, in fact, not Shariah-compliant. So, Muslims should investigate product details to make informed decisions.
In particular, Muslims should seriously consider the intent of such insurance contracts.
Are these insurance products based upon the idea that one person will make a profit from others? Do these companies intend to gamble on the fortunes of their customers? How open and honest are these companies about how their insurance works?
For many modern financial institutions, answering these questions will render the product non Shariah-compliant.
It is possible to argue that an individual paying for insurance is not breaching the principles of riba, gharar and maysir. This is because their intention in purchasing insurance may be to provide security for their family. They do not seek to acquire wealth through their purchase but merely guard against unforeseeable loss.
However, a stronger argument for the idea that insurance is halal can be made for those types of insurance products that embody the takaful principle.
To make halal financial decisions, Muslims are advised to engage with organisations that have genuine community-oriented intentions. Such organisations will be honest and open in their dealings and not seek to make an undue profit.
Their primary intention of such organisations should be to support members through hardship rather than to profit from them. Likewise, Muslims using such organisations should honestly view their insurance contributions as charitable donations to assist their community. In the same way, Muslims should be mindful of whether other financial decisions they make according to these principles.
An alternative for halal insurance is for smaller groups of Muslims to organise their own community insurance forms. This may be the surest way of maintaining halal practices because members of the group would have full control over the contributed funds.
Your money, your decision
Perhaps the biggest lesson from this debate is the importance of taking care in your financial decisions. In today’s busy, modern world, it is all too easy to go with the flow and not consider the moral implications of our actions.
By stopping to consider what we do with our money and how it affects those around us, we can act in a more fair, responsible, and compassionate manner to ourselves, our families, and our communities.
If you have further questions or would like to find out more, feel free to get in touch.