Most Australians have default life, total and permanent disability (TPD), and income protection (IP) insurance inside their super fund. See if your cover is adequate for your situation.
| Cover type | Current | Recommended | Gap |
|---|
Under the Protecting Your Super (PYS) reforms, super funds provide default insurance for eligible members. However, default cover is often insufficient for people with mortgages or dependants.
Life insurance (death cover): Pays a lump sum to beneficiaries on death. Recommended: 10-12× annual income + debts.
TPD: Pays if you become totally and permanently disabled. Recommended: 5-8× annual income.
Income protection: Replaces up to 70% of income for a set period (usually to age 65 in super).
Super insurance premiums are deducted from your super balance, reducing your retirement savings. Compare costs across funds at YourSuper Comparison Tool on ATO.gov.au.
Most Australians have insurance through their super fund without realising it. The three main types of insurance that super funds typically provide are life insurance (death cover), total and permanent disability (TPD) insurance, and income protection insurance.
| Insurance Type | What It Covers | How It Pays |
|---|---|---|
| Life insurance (death cover) | Pays a lump sum to beneficiaries on death | Lump sum to death benefit nominees |
| Total and Permanent Disability (TPD) | Serious illness/injury preventing you from working | Lump sum while still alive |
| Income protection | Temporary inability to work due to illness or injury | Monthly income (typically 75% of salary, up to 2yr or age 65) |
What happens to my super insurance if I stop working?
If your super account is inactive (no contributions) for 16+ months, your insurance cover may be automatically cancelled under the Protecting Your Super rules. To retain cover, contact your fund and opt in to keep the insurance. This is particularly important for people taking parental leave or career breaks.
Is insurance through super cheaper than buying direct?
Often yes, because super funds negotiate group rates on behalf of their entire member base, spreading the risk across a large pool. The cost is also effectively subsidised — premiums are paid from pre-tax super contributions, whereas direct insurance premiums are paid from after-tax income. However, super insurance may have more restrictive definitions or lower cover amounts than retail policies.
Should I consolidate my super accounts?
Usually yes — multiple accounts means multiple sets of fees eroding your balance. However, always check whether any accounts you plan to close hold insurance cover before consolidating. Closing an account cancels any insurance held within it, and you may not be able to get equivalent cover in your remaining fund without new medical underwriting.