Industry super funds offer cheaper life insurance than stand-alone policies, but there are other issues for customers to consider, consumer group Choice says.

“It’s more important than ever to know how much you’re paying for life insurance and what you get in return, because premiums for major industry super funds have gone up about 40% this year,” it says.

For men, the average premium for $750,000 of life cover through an industry super fund is about half that of a separate policy, according to a report in the group’s October magazine. For women it is about 30% lower.

But stand-alone policy beneficiaries will receive benefits tax-free, which is not always the case with super-linked life cover, Choice says.

“While your spouse will normally get the benefit tax-free, your adult children may have to pay tax.”

Separate policy payout times are also faster, the report says.

Policies held through super funds typically expire about age 65-70, while separate policies can continue until 90, albeit with potentially “astronomical” premiums.

Consumers should weigh up whether they want stepped premiums that increase with age or level premiums, while other considerations include health check requirements and whether total and permanent disability cover should be held within super or separately.

The average premium for a 50-year-old man with $750,000 cover in a stand-alone policy is $1372. Within super it is $677, according to Rice Warner Actuaries data cited by Choice.

For women the respective average premiums are $1027 and $629.

Choice urges consumers to make “binding nominations”, to ensure their wishes are followed when allocating funds to beneficiaries.