Insurance in superannuation plays a critical role in Australia’s superannuation system by protecting Australians’ balances if they are not able to work through to retirement due to a major illness or injury. It has been an important feature of the superannuation system since the 1980s.
Superannuation trustees began offering life insurance through super as a way of providing affordable cover to people, including those working in higher risk occupations such as construction who would not otherwise have access to it.
Almost 10 million Australians have life insurance provided through superannuation in the form of death cover, total and permanent disability cover and/or income protection cover. For many Australians, the life insurance they hold in superannuation is the only life insurance protection that they have. ASIC has found that more than 70 per cent of superannuation accounts with insurance have the default cover automatically provided by the superannuation trustee.
This approach ensures most working age Australians have a base level of insurance coverage and the option to increase their cover within superannuation, subject to underwriting.
We believe Australians consumers and the broader economy are best served when superannuation is underpinned by life insurance. Life insurance steps in to meet the financial needs of people with a major illness or an injury, which helps protect their superannuation balance and allows them to have a financially secure retirement.