Life Insurance Through Super: Is It Enough in 2025?

If you have a superannuation account, there’s a good chance you already have some life insurance. In 2025, most super funds automatically provide default life and TPD cover to members. But is this default cover enough to protect your family if the worst happens?

How Does Life Insurance Through Super Work?

Super funds offer life insurance as an opt-out benefit, meaning you’re automatically covered unless you choose otherwise.

• Automatic cover: Most funds provide a default level of death and TPD cover based on your age and account balance. This cover starts when you meet certain eligibility criteria (e.g., account balance above $6,000 or age 25+).

• Premiums from super: Your premiums are deducted directly from your super balance, so you don’t pay out-of-pocket. However, this reduces your retirement savings over time.

• Unitised or fixed cover: Some funds offer fixed dollar amounts; others use a “units” system where each unit provides a certain level of cover.

• Group policy rates: Because super funds negotiate group rates, premiums can be lower than retail policies—but cover may also be less comprehensive.

2025 Updates: What’s Changed?

Recent reforms have reshaped super-held insurance:

• Protecting Your Super legislation: Since 2019, insurance is cancelled on inactive accounts (no contributions for 16 months). In 2025, funds must notify members before cancellation and make it easier to opt back in.

• Stapling: Your super fund now follows you between jobs, which means your insurance cover does too. However, changing jobs may still trigger a new waiting period or exclusions if you switch funds.

• Improved disclosure: ASIC has required clearer communication about cover levels, premiums, and how to claim. Most funds now offer online dashboards showing your exact cover amount.

• Default cover increases: Some industry funds have increased default cover levels in 2025 to reflect rising living costs and property prices.

Is Super Insurance Enough?

For many Australians, super insurance is a good baseline—but it may not be sufficient. Consider:

• Cover amount: Default cover often ranges from $100,000 to $300,000. If you have a mortgage, young children, or a non-working spouse, you may need significantly more.

• TPD definition: Super-held TPD policies often use restrictive “any occupation” or “activities of daily living” definitions, making it harder to claim than retail “own occupation” policies.

• Waiting periods: Some super policies have waiting periods for certain conditions, especially mental health.

• Income protection: Super funds may offer basic income protection, but benefit periods are often capped at 2 years—far shorter than retail policies that pay to age 65.

Real-World Example: Super Insurance Gap

Lisa, a 36-year-old nurse in Melbourne, assumed her super fund’s default cover was enough. When she reviewed her policy in 2025, she discovered she had $200,000 in life cover—but her mortgage alone was $550,000. By topping up with a retail policy, she increased her total cover to $800,000 for an additional $35 per month, giving her family real protection.

Should You Rely on Super Insurance Alone?

Super insurance is convenient and cost-effective, but it’s rarely a complete solution. Review your cover annually, calculate how much your family would actually need, and consider supplementing with retail cover if there’s a gap. A financial adviser can help you assess whether your current cover is fit for purpose.