Otivo

Learn with Otivo

How much life insurance do you have through your super?

9 minutes|

How much life insurance do you have through your super?

By Philippa Billings, Chief Advice Officer, Otivo

Around 9.3 million Australians hold life cover through their super, and just over seven in ten of them hold exactly the amount their fund picked. That figure was set by an actuary for an average member, not by the person whose account is paying for it. The average death benefit works out at $228,000, for an average premium of $240 a year. Here's what default cover actually is, what it can't know about you, and where the number that applies to your own account is written down.

Most Australians with life insurance through super hold default cover, which is the amount automatically provided by their fund. As at June 2025, APRA data covering 9.3 million insured members shows the average death benefit through super was $228,000, at an average premium of $240 a year, with 70.6% of members sitting at the default level.

What is default insurance cover in super?

Default cover is insurance a super fund provides automatically when you join, without an application and without medical questions. It usually includes death cover and total and permanent disability cover, and sometimes income protection. The amount is generally set in units that scale with your age, and in some funds with your occupation category, which means it can move from year to year without you touching anything.

Put simply, default cover is insurance you were given rather than insurance you chose. That isn't a criticism of the design. Group cover exists precisely so that people who would never get around to buying insurance still have some, and it's priced accordingly.

It doesn't reach everyone. Since 1 July 2019, funds generally can't provide cover on an opt-out basis to a new member aged under 25, or on an account with a balance below $6,000, unless the member opts in. Cover on an account that hasn't received a contribution for 16 months is generally cancelled. Funds can apply to APRA for an exception where members work in a dangerous occupation, and a small number have done so.

How much death cover does the average member actually have?

As at June 2025, the average death benefit insured through superannuation was $228,000, on an average premium of $240 per insured member per year, across 9,256,000 insured lives. Across the system that's around $2.2 billion in annual premiums, deducted from member accounts.

That last detail matters more than it looks. Premiums come out of the super balance, not out of take-home pay, which is part of why the cost is easy to overlook. It's also why the trade-off runs in two directions: cover you don't need is a slow drag on the balance, and cover that stops at a level set for someone else is a gap that only shows up at claim time.

For a 34-year-old on $95,000 with a mortgage and one dependent child, $228,000 is a different proposition than it is for a 58-year-old with no debt and no dependants. Both may be holding roughly that amount today.

Why do seven in ten members sit at the default level?

APRA's fund-level data for June 2025 shows how the 9.3 million insured members are distributed. Just over 70% hold cover at the default level. About 7% hold less than the default. Around 11% hold more than the default without underwriting, and a further 11% hold more after providing medical and other information to the insurer.

Read the other way, roughly three in ten members have actively engaged with the amount of cover they hold. The rest are where the fund put them.

ASFA's analysis of the same data notes that cover levels are markedly higher among members who actively engage with their super account, and that access to affordable advice can be a barrier to working out an appropriate level. Default cover is designed to work without a decision, which is its strength and also the reason it so rarely gets revisited.

The pattern isn't unique to Australia. The World Life Insurance Report 2027, published in September 2026 by the Capgemini Research Institute and LIMRA from a survey of 6,175 consumers across 18 countries, found that 57% of people with employer-provided cover feel generally confident in it but have never formally assessed whether it suits their needs. That's a global finding rather than an Australian one, but it describes the same gap between holding cover and knowing what it does.

The four things a default setting can't know about you

A default amount is built from what the fund has on file, which is usually your age and sometimes your occupation category. There are four things it generally doesn't know.

  1. Your income, and what would need replacing if it stopped.
  2. Whether anyone else depends on that income.
  3. What you owe, including a mortgage and any other debt.
  4. What cover you already hold, whether in another super account or outside super entirely.

Those four inputs are what any insurance needs calculation is built from. It's why two members of the same age, holding identical default cover, can arrive at very different numbers once they run them. ASIC's MoneySmart publishes a life insurance claims comparison tool and general guidance on working through these inputs, and most funds make a needs calculator available.

How do TPD and income protection cover differ from death cover in super?

Total and permanent disability cover pays a lump sum if illness or injury means you're unlikely to work again. As at June 2025, 8,215,000 members held TPD cover through super, with an average sum insured of $190,000 and an average premium of $305 a year. TPD cover through super generally ends at 65, where death cover usually runs to no later than 70.

Income protection, which APRA reports as disability income insurance, replaces part of your income for a period if you can't work. It's held far less widely: 4,390,000 members, at an average insured amount of $3,730 a month and an average premium of $410 a year. Fewer than half as many members hold income protection through super as hold death cover.

Claims through group super are admitted at high rates. For the 12 months to 31 December 2025, APRA recorded admitted rates of 98% for death cover, 92% for TPD and 96% for income protection in the group superannuation channel.

What happens to insurance in super when an account goes quiet or is consolidated?

Insurance attaches to the account, not to the person. When a super account is closed, any cover attached to it generally ends with it, and that cover doesn't transfer to the receiving fund. Someone who consolidates two accounts to save on fees can inadvertently cancel cover they didn't know they had.

The same applies to accounts that go quiet. Where an account hasn't received a contribution for 16 months, cover is generally cancelled. Funds are required to write to members before that happens, though a letter only works if the fund holds a current address and the member opens it. The Australian Financial Complaints Authority publishes guidance on complaints about cover cancelled under these rules.

Replacing cancelled cover isn't always a matter of ticking a box. Depending on age and health at the time, new cover may need underwriting, and pre-existing conditions can be excluded. Checking what cover exists on each account before consolidating is one of the things many Australians find worth doing first.

Frequently asked questions

Does everyone automatically get insurance with their super?

No. Funds generally can't provide cover on an opt-out basis to new members under 25, or on accounts with balances below $6,000, unless the member opts in. Cover is also generally cancelled on accounts that haven't received a contribution for 16 months. Some funds have an approved exception for members in dangerous occupations.

Can you change the amount of insurance cover in your super?

Yes. Funds generally let members increase cover, reduce it, or turn it off. Increases up to an age-based automatic acceptance level usually don't require medical information, while larger increases are typically underwritten, meaning the insurer asks for medical and other details before deciding what to offer.

What happens to insurance in your super if you consolidate accounts?

Cover attached to a closed account generally ends and doesn't move to the new fund. Anyone consolidating accounts may want to check what cover sits on each one before closing anything, since replacing it later can require underwriting.

Can a financial advisor help with insurance inside super?

A licensed financial adviser, sometimes spelled advisor, can give personal advice on insurance held inside super, taking into account income, dependants, debts and cover held elsewhere. Digital advice services licensed to provide personal advice can cover the same ground.

Working out where you actually sit takes the four inputs above and puts them against the cover already on your account. Otivo's personal insurance module does that calculation, drawing on existing cover, dependants, debts, age, income and retirement goals, and it's the same question the data says seven in ten members haven't yet asked of their own account. Otivo Pty Ltd holds AFSL and Australian Credit Licence No. 485665.

Sources

Disclaimer

The information in this communication is current as at September 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.

Share

Related reading

What's a benefit period?Indemnity or agreed value?What's a waiting period?