Most Australians have life insurance they didn't choose and may not even know about — because it came automatically with their super fund. Default insurance inside super can be a valuable safety net, but it can also be an unnecessary cost that eats into your retirement savings if you don't need it.
Types of insurance inside super
Death cover (life insurance)
Pays a lump sum to your nominated beneficiaries if you die. Default cover levels vary by fund but are typically between $100,000 and $500,000, depending on your age and occupation category. Premiums increase with age.
Total and Permanent Disability (TPD)
Pays a lump sum if you become permanently unable to work. Most funds offer this alongside death cover. Be aware that the definition of disability varies between funds — "any occupation" TPD is harder to claim on than "own occupation."
Income protection
Pays a portion of your income (typically 75–85%) if you're temporarily unable to work due to illness or injury. Not all funds include this by default, and where they do, the waiting period and benefit period vary significantly.
How much does it cost?
Insurance premiums are deducted from your super balance, not from your bank account — which makes them easy to ignore. But they're real costs:
| Age | Typical death + TPD premium (annual) | Impact on $50K balance over 10 years* |
|---|---|---|
| 25–29 | $150–$300 | $2,000–$4,000 |
| 30–39 | $250–$600 | $3,500–$8,500 |
| 40–49 | $500–$1,500 | $7,000–$21,000 |
| 50–59 | $1,200–$4,000 | $17,000–$56,000 |
*Includes premiums paid plus lost investment returns. Illustrative only.
When insurance inside super makes sense
- You have financial dependants (partner, children, mortgage)
- You want basic cover without undergoing medical checks (default cover is often automatic)
- You want premiums paid from pre-tax money (inside super, premiums are effectively tax-deductible)
- You're self-employed and don't have employer-provided group insurance
When you might not need it
- You're young and single with no dependants or debts
- You already have adequate cover through another policy
- The premiums are excessive relative to your super balance (eating into your retirement savings)
- You have a very low balance where the premiums are a disproportionate drag
How to check and adjust your cover
- Log into your super fund online or check your annual statement
- Note what cover types you have, the insured amounts, and the annual premium
- Assess whether the cover level is appropriate for your circumstances
- You can increase, decrease, or cancel cover through your fund. Some changes may require medical assessment.
Related guides
- What happens to your super when you die
- Beneficiary nominations explained
- Super fees explained
- How to consolidate your super