The majority of Australian’s life insurance cover is held in superannuation, a new report from Rice Warner has confirmed.
The report, commissioned by the Association of Superannuation Funds of Australia (ASFA) found that without the provision of insurance through superannuation, the underinsurance gap in Australia would be much bigger.
In terms of the total size of insurance cover across the community, group insurance within super represents:
- 71% of total death benefit sums insured
- 88% of overall total and permanent disablement (TPD) sums insured
- 59% of income protection monthly benefits
Further, this cover reduces government spending on social security by $403 million annually.
ASFA CEO, Pauline Vamos, said that while there had been significant commentary about superannuation fees, more focus should be placed on the benefits superannuation delivers.
Underinsurance is a real problem for individuals and for governments
“Underinsurance is a real problem for individuals and for governments, which absorb the cost of underinsurance through the provision of social security services. What this report shows is that these costs would be substantially higher if millions of people were not covered by insurance through their superannuation fund.
“Default insurance has also helped thousands of people deal with financial hardship after an unexpected tragedy. Without it, it’s likely many people would not even have a basic cover of life, TPD or income protection insurance cover. Therefore, it has an important role to play in reducing the underinsurance gap for millions of individual fund members,” Ms Vamos said.
