Most super funds will automatically offer you insurance when you sign up. This insurance can help replace your lost income if you have an illness or injury that leaves you unable to work.
Similarly, if you die prematurely and have people (such as children or a spouse) relying on you financially, it will provide them with a lump sum of money.
This insurance isn't well understood, and many people don't even know they have it.
Here's our simple guide to insurance in super.
On this page:
- The three types of insurance in super
- When is insurance in super not automatically offered?
- Why insurance in super can get cancelled
- What changing super funds can mean for your insurance
- How to check your insurance is right for you
- Insurance in super vs insurance outside super
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The three types of insurance in super
There are three main types of insurance you can get included in your superannuation:
1. Total and permanent disability (TPD) insurance
Most superannuation funds will offer this type of insurance. It provides you with a lump sum of money if you become sick or injured and cannot work again.
2. Income protection (IP) insurance
This gives you a regular income if you're temporarily out of work because you are sick or injured. It pays a specified amount per month for a specified amount of time, often two years. Despite the name, this insurance doesn't provide you with income if you lose your job for any other reason.
3. Life insurance (sometimes called death cover)
If you die prematurely, this will provide your beneficiaries, such as your children and partner, with a lump sum of money.
Which insurance is offered by default
Most superannuation funds will provide you with TPD and life insurance automatically, or by 'default'. Super funds usually offer income protection insurance as an optional add-on (see our guide to income protection insurance).
In most cases, there are no health checks or questions ('underwriting') for default insurance – you get the cover even if you have some pre-existing health condition. However, some funds do have pre-existing condition exclusions or waiting periods in their policies, which means your claim may be denied if you make a claim because of that health condition. You should check with your fund to see what their exclusions and waiting periods are.
TPD and life insurance are also available outside of super – so you can have cover inside super, outside super, or a combination of both. If you get insurance outside of super, however, you may have to go through underwriting, with health checks and questions.
Because TPD and life insurance in super is provided automatically, there are no health checks or underwriting
You can choose to have more insurance than the default cover your fund offers. This insurance may work differently – contact your fund for details. For example, around the time of a 'life event' such as getting married, having a child or buying a home, you may be able to increase your insurance cover by answering a few questions.
When is insurance in super not automatically offered?
You're under 25
Generally, if you're under 25, your super fund won't automatically provide you with insurance.You can ask your fund to 'turn on' your insurance if you are under 25 and want the insurance.
However, some funds may automatically provide you with cover if you work a dangerous job, such as in construction. You can check with your fund if you have insurance. You can also cancel this cover if you choose.
You have a low super balance
Insurance won't be automatically included in your super if you have less than $6000 in the account. Again, you can ask your super fund to turn on your insurance if you have a lower balance but want insurance. You need to have enough money in your account to pay for the insurance.
You're 65 or over
Generally, TPD insurance in super stops at age 65 and death insurance ends at age 70. However, the age when your insurance stops varies depending on your fund. Check with your fund.
In 2024, we looked at insurance in super for older Australians, including the costs, benefits and age cut-offs for some of the major super funds.
TPD insurance generally ends at age 65, and life protection insurance is no longer offered from 70.
Why insurance in super can get cancelled
Since 2019, super funds have to cancel insurance on inactive super accounts. Your account will be considered inactive if no money has gone into the account for a set time – usually 16 months, but it could be less. Funds will also cancel insurance when the account balance is too low to pay for the insurance.
Your fund will contact you if your insurance is in danger of being cancelled. Keep your contact details up to date with your fund to ensure you get this letter.
You can still keep your insurance by contacting your fund.
What changing super funds can mean for your insurance
Changing jobs can impact your insurance in super. For example, some policies have different coverage and premiums for people working in an office, compared to those working outdoors or on a construction site.
Some people may switch or start a new super account when they change jobs. This might see you pay for two sets of cover, which can be costly, or see the cover in your older account lapse.
If you change jobs it's important to check that your insurance is still right for you
If you change jobs, it's important to check with your fund that your insurance still covers your type of work and any additional steps you might need to take to keep the insurance you want active.
Super Consumers Australia is advocating for all funds to offer good-value default cover for all their members.
How to check your insurance is right for you
You can check what insurance you have through your fund's website or by contacting your fund.
We've written a template for contacting your fund about your insurance.
Moneysmart has a to help you decide how much insurance you may need, based on your circumstances.
People who have no dependants may not feel they need life insurance
You might also want to think about whether you need life insurance at all. People who have no dependants may not feel they need it.
You should also check if your fund has defaulted you into the wrong work category. Funds usually charge higher premiums for 'blue collar' workers, who do more risky physical work. You may be able to pay less if you're doing an office job. Contact your super fund for more information.
Insurance in super vs insurance outside super
A key difference between insurance in super and insurance outside super is that the default insurance in super is provided automatically, without any checks or questions about your health.
If you have a pre-existing health condition, such as a type of cancer, it may be harder – or more expensive – to get cover outside super, or to change your cover inside super. Or the insurance provider may not pay if you make a claim relating to the pre-existing health condition.
If you have a pre-existing condition, it may be harder – or more expensive – to get cover outside super
Another difference is how long the cover continues. Insurance outside of super usually continues until the cut-off age, as long as you keep paying the premiums. It will become more expensive, or your benefits will go down, as you age.
Your super fund will automatically deduct the money for this insurance from your super account and you get a tax saving on the premiums.
If you need to make a claim
- Moneysmart has a , including for cover that's in your super.
- Financial Rights Legal Centre has an that can help you with your claim.
- If the insurer pays your claim, the money will go into your super account. If you want to access the money, you may need to pay tax on the amount you withdraw. You typically have to pay tax if you take money out of your super account when you're under 60 years old, or if you're 60–64 years old and not yet retired.
This content was produced by Super Consumers Australia which is an independent, nonprofit consumer organisation partnering with ÐÓ°ÉÂÛ̳to advance and protect the interests of people in the Australian superannuation system.
Stock images: Getty, unless otherwise stated.
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