By Philippa Billings, Chief Advice Officer, Otivo
Most Australians have insurance inside their super, often without ever choosing it, and that quiet default cover lulls a lot of people into thinking they're sorted. Sometimes they are. Often they're not, because default cover is designed as a general baseline, not a fit for your particular life. Whether it's enough depends on the gap between that baseline and what you'd actually need. Here's how to check.
Quick answer
The insurance in your super is often a default level designed as a general baseline, which may or may not match your needs. It's typically modest, so for people with dependants, a mortgage or higher living costs, it may fall short. As at July 2026, checking your default cover against a needs-based estimate is the way to tell whether it's enough.
What insurance do you get by default in super?
Many super funds automatically provide a default level of cover to eligible members, commonly life insurance and total and permanent disability cover, and sometimes income protection. It's convenient, since it's arranged for you and the premiums come out of your super balance rather than your pocket. But default cover is set at a general level intended to suit a broad membership, not calibrated to any individual, which is the root of the question about whether it's enough.
Why might default cover not be enough?
Because it's generic and often modest. A default amount designed for the average member can fall well short for someone with a mortgage, young children or higher living costs to protect. This gap between the cover people have and the cover they'd actually need is common enough that underinsurance is a well-recognised issue in Australia. The convenience of default cover is exactly what makes it easy to assume it's sufficient when it may not be.
How do you know if there's a gap?
By comparing what you have with what you'd need. Work out a needs-based estimate, the debts, income replacement and future costs your household would require, then set your existing default cover against it. If the default falls short of that estimate, you've found the gap. It's the same subtraction used to size any cover, and it turns a vague worry about whether you're protected into a specific number.
What are the trade-offs of cover in super?
There are real upsides and some catches. On the plus side, cover in super is convenient and the premiums are paid from your balance rather than your take-home pay. The catches are that those premiums reduce your retirement savings over time, default levels may be limited, and not all cover types are available, trauma cover, for instance, has not been available inside super for new policies since July 2014. Weighing the convenience against these points is part of judging whether relying on super cover alone is right for you.
What can you do if it's not enough?
You generally have options. Many funds let you apply to increase your cover inside super beyond the default level, and some people choose to hold additional or different cover outside super to fill specific gaps. Which approach suits depends on your needs, your budget and how the premiums affect your retirement savings. The key step is simply checking, since the gap only becomes a problem when it's discovered too late.
Frequently asked questions
Is default super insurance enough?
Often it's a modest baseline that may fall short for people with dependants, a mortgage or higher living costs. Whether it's enough depends on how it compares with a needs-based estimate of what you'd actually require.
Does insurance in super reduce my retirement savings?
Yes. Premiums for cover held in super are deducted from your balance, so over time they reduce your retirement savings. That's worth weighing against the convenience when deciding how much cover to hold there.
Can I increase the insurance in my super?
Often yes. Many funds let you apply to increase your cover above the default level, subject to their terms and any health assessment. Some people also hold additional cover outside super to fill gaps.
Where to from here
Default cover is a floor to build on, not a finish line. 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 whether your default cover measures up.
Sources
- ASIC MoneySmart — insurance through super — moneysmart.gov.au
- Australian Securities and Investments Commission — insurance in superannuation — asic.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.