Superannuation: Critical Life Insurance Protections for 6 Million Australians

In a recent study conducted by the Association of Super Funds Australia (ASFA), it has been revealed that superannuation plays a vital role in providing life insurance coverage for millions of Australians. The research highlighted the significance of insurance provisions within super funds, emphasizing that they offer crucial protection to individuals who might otherwise go uninsured.

The report titled “Providing cover to those who need it: The success of insurance in superannuation” indicated a notable increase in group insurance coverage levels over the previous year. Currently, approximately 8.8 million Australians are covered by life insurance through their super, showing a rise of 300,000 individuals from the preceding year. Similarly, about 8.1 million people have total and permanent disability (TPD) coverage through insurance, reflecting an increase of 400,000 from the previous year.

ASFA’s analysis compared historical opt-in rates of life insurance and TPD insurance with the current coverage levels available through super funds. The findings suggest that an additional six million Australians now benefit from insurance coverage, safeguarding their financial well-being without impacting their household expenses significantly.

Data from the Australian Prudential Regulation Authority (APRA) for the year ending June 2024 revealed substantial payouts from group insurance cover via super funds. A total of $1.7 billion was disbursed in death benefit payments, while $3.0 billion was paid out in TPD benefits.

Mary Delahunty, CEO of ASFA, expressed satisfaction with the increased coverage levels, stating that superannuation not only aids in securing a comfortable retirement but also serves as a safety net for millions of individuals who might otherwise face financial instability. Delahunty further emphasized that this enhanced coverage not only protects the insured individuals and their families but also alleviates the strain on the social security system.

This research underscores the essential role of superannuation in offering life insurance protections to a significant portion of the Australian population, ensuring financial security and peace of mind for millions across the country.