Insurance Inside Your Super: What You Have, What It Costs, and Whether to Keep It (2026)

Most large Australian super funds automatically provide three types of insurance to eligible members:

• Life insurance (death cover): A lump sum paid to your nominated beneficiaries if you die or are diagnosed with a terminal illness. Default cover amounts vary by fund - typically $100,000–$500,000 for the average working-age member, though the exact amount depends on your fund, age, and occupation.
• Total and Permanent Disability (TPD) insurance: A lump sum if you become totally and permanently disabled and are unable to work again. Inside super, most funds use the 'any occupation' TPD definition - you must be unable to work in any occupation for which you are reasonably suited by education, training, or experience. This is a more restrictive definition than 'own occupation' (available outside super), which pays if you cannot perform your specific role.
• Income protection (salary continuance): Some - but not all - super funds include income protection as default cover. Where it exists, it typically pays 75% of your pre-disability income for a benefit period of 2 years after a waiting period of 60–90 days. This is more limited than retail income protection policies, which can pay to age 65.
• Not all members are covered by default: Members under 25, those with account balances under $6,000, or those who have not met work tests may have their default insurance cancelled under Protecting Your Super legislation. Check your fund's eligibility rules.

Super insurance premiums are deducted directly from your account - reducing the capital available to compound for retirement:

• How premiums are charged: Monthly or annually as a direct debit from your super balance. Unlike paying insurance premiums from take-home pay, you do not feel this cost day-to-day - which is why many members are unaware of what they are paying.
• Finding your premiums: Log in to your super fund's member portal or check your annual statement. Your insurance premiums are shown separately from administration fees and investment returns. Many members are surprised by the total.
• Typical costs: For a 35-year-old in a low-risk occupation, default life cover of $250,000 might cost $2–$5/month; TPD cover $3–$8/month; income protection $20–$50/month. These amounts increase significantly with age - stepped premium policies (the default in most funds) increase every year.
• Long-term balance impact: $50/month in super insurance premiums costs $600/year. Over 30 years, with that capital invested at 7% p.a., the foregone balance is approximately $57,000 at retirement - a meaningful drag, particularly for younger members with small balances.
• Multiple super accounts: Many Australians have insurance premiums being deducted from multiple super accounts - each paying default cover. This is both costly and usually unnecessary. Consolidating super funds into one eliminates duplicate premiums while maintaining cover.

Default cover meets some needs but systematically falls short in specific situations:

• Adequate for: Young, single workers with no dependants and no significant debts, where some cover is better than none and the cost is low. The group-rate pricing inside super is often excellent value at younger ages.
• Inadequate for: Families with a mortgage - default life cover of $200,000–$300,000 may not cover the mortgage alone, let alone replace years of income for dependants. High-income earners whose income protection benefit (capped at 75% of a fund-defined salary base) doesn't reflect their actual income. Professionals in specialised roles who need own-occupation TPD rather than any-occupation.
• TPD any vs own occupation: This is the most commonly underestimated gap. A surgeon who loses hand function is likely TPD under own occupation but may be found capable of working in a non-surgical medical role under any occupation - and the claim denied. Own-occupation TPD is only available outside super.
• Benefit period for income protection: Default income protection inside super typically pays for 2 years. If you cannot return to work after 2 years due to a serious illness or injury, payments cease. A retail income protection policy with a benefit period to age 65 continues paying - a critical distinction for severe, long-term disability events.

A practical checklist for reviewing what you have and whether it is fit for purpose:

• Step 1 - Find out what you have: Log into your super fund portal. Check the type of cover (life, TPD, income protection), the cover amount, the definition used (especially for TPD), the premium, and any exclusions or waiting periods that apply to your account.
• Step 2 - Check for multiple accounts: Use ATO's myGov to see all super accounts held in your name. Identify funds deducting insurance premiums. Consolidate after confirming the insurance implications - do not cancel cover without replacement in place.
• Step 3 - Assess adequacy: Is your life cover enough to pay out the mortgage and replace several years of income for your dependants? Is TPD on any-occupation or own-occupation? Does income protection pay for 2 years or to age 65? Compare against what you actually need.
• Step 4 - Supplement or switch: If your super's default cover is insufficient, you can increase cover within the fund (often without medical underwriting up to specific limits), or purchase supplementary cover outside super (own-occupation TPD, retail income protection with a longer benefit period, trauma cover). Decide whether to supplement inside super, outside super, or both.
• Step 5 - Review annually: Insurance needs change with life events - buying a home, having children, changing jobs, paying off debts. Treat your super insurance as part of your overall insurance review, not as a set-and-forget default.

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