By Philippa Billings, Chief Advice Officer, Otivo
You can hold personal insurance inside your super, and if you're like most working Australians, you probably already do without having arranged it. Cover bundled into super is convenient and quietly common, but it works differently from cover you buy directly, and not every type is available there. Understanding how it works is worth a few minutes. Here's what holding insurance inside super actually involves.
Quick answer
Yes, you can hold personal insurance inside your super, and many funds provide default cover automatically. Life insurance and total and permanent disability cover are commonly available, and some funds offer income protection. As at July 2026, premiums are deducted from your super balance, and trauma cover has not been available inside super for new policies since July 2014.
What insurance can you hold inside super?
The common types are life insurance and total and permanent disability cover, and many funds also offer income protection. A large share of super members hold at least some of these as default cover, arranged automatically when they joined the fund. So for most people the question isn't whether they can hold insurance in super, but what they already have and whether it suits them. Life and TPD are the near-universal pair, with income protection more variable between funds.
What insurance can't you hold inside super?
The main exclusion is trauma cover, sometimes called critical illness cover, which pays a lump sum on diagnosis of a serious condition. Trauma cover has not been available inside super for new policies since July 2014, so people who want it hold it outside super. This is a genuine gap to be aware of, if trauma cover is something you want, super isn't the place to arrange it, and you'd need to consider it separately.
How are the premiums paid?
Premiums for insurance held in super are deducted from your super balance rather than from your take-home pay. That's part of the convenience, you're not paying out of pocket each month. The trade-off is that those premiums reduce the amount left to grow for your retirement, so cover in super has a quiet long-term cost. It's worth making sure the cover is worthwhile, since you're effectively funding it from your future retirement savings.
What are the advantages of insurance in super?
Convenience is the big one. Default cover is arranged for you, premiums come out of your balance automatically, and the cost can be relatively efficient because funds buy cover in bulk for their members. For many people it means having a level of protection in place with no active effort, which is far better than having none. For those who might otherwise never get around to arranging cover, the automatic nature of it is a real benefit.
What are the drawbacks?
There are a few worth knowing. The premiums reduce your retirement savings over time. Default cover levels may be lower than you actually need. Not all cover types are available, as with trauma cover. And cover held in super can lapse if your account becomes inactive or the balance runs too low to pay premiums, which can leave you unknowingly uninsured. These aren't reasons to avoid insurance in super, but they're reasons to check rather than assume it's all handled.
Frequently asked questions
Can I hold life insurance in my super?
Yes. Life insurance is commonly available inside super, often provided automatically as default cover. Total and permanent disability cover is usually available too, and some funds also offer income protection.
Can I hold trauma cover in super?
No. Trauma cover, which pays on diagnosis of a serious illness, has not been available inside super for new policies since July 2014. People who want it arrange it outside super.
How are super insurance premiums paid?
Premiums are deducted from your super balance rather than your take-home pay. That's convenient, but it reduces your retirement savings over time, so it's worth ensuring the cover is worth the cost.
Where to from here
Holding insurance in super is common and convenient, but worth understanding rather than assuming. Otivo, a licensed Australian financial advice platform holding AFSL and Australian Credit Licence No. 485665, offers a personal insurance inside super module that helps you understand how much personal insurance you might need, based on your dependants, debts, income, age and existing cover. It helps you see what your super cover does and doesn't do.
Sources
- ASIC MoneySmart — insurance through super — moneysmart.gov.au
Disclaimer
The information in this communication is current as at July 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.