Simply put this is the amount the insurance company will pay out if you die and have current death cover. If the insurance is taken out through a super fund, then the premiums are tax deductible to the super fund (saving the client 15%) and the payout on death will be made to the super fund and then distributed from there.

Careful planning is needed to ensure that minimal tax is incurred by the insurance payout if it is made to the super fund.

The level of cover needed can be complicated to work out, but a rule of thumb may be to multiply your current annual earnings by the number of years to retirement.