Insurance in super provides critical protection for 6 million Australians who would otherwise be uninsured, new research from peak superannuation body ASFA has found.
ASFA analysed historical opt-in rates of life and total and permanent disability insurance and compared it with current levels of coverage Australians have through their super to conclude an extra 6 million+ Australians are protected. Importantly, in this cost-of-living crisis, this critical protection has no impact on their household spending as it is included with their super.
“ASFA’s research shows superannuation is not only helping Australians achieve a dignified retirement, it is also protecting millions of people who would otherwise fall through the net,” said ASFA CEO Mary Delahunty.
Launched today at ASFA’s sold out Spotlight on Insurance in Superannuation event in Sydney, ASFA’s research paper Providing cover to those who need it: The success of insurance in superannuation also reveals that rates of group insurance coverage are on the increase in the year to June 2024 following a period of decline.
Drawing on recently published APRA detailed data, the key findings of ASFA’s research paper include:
Numbers of those insured are growing
- 8.8 million Australians are protected by life insurance through their super, up from 8.5 million the year before.
- 8.1 million are protected for total and permanent disability through insurance, up from 7.6 million.
- The take-away figure is that, with insurance provided through superannuation, it is estimated that approximately 6 million Australians (based on historical opt-in rates) are currently protected who otherwise would have no protection.
APRA’s data also show group cover through superannuation resulted in a total of $1.7 billion in death benefit payments and $3.0 billion in TPD (total and permanent disability) payments in 2023-24.
Improved claims handling timeframes
- Insurers processed claims faster between 2023 and 2024, with the average time taken to finalise TPD claims down from 4.9 to 4.4 months and from 2.0 to 1.6 months for Disability Income Insurance claims.
- The vast majority (72%) of death benefit claims are finalised by insurers within two months, with only one percent taking longer than 12 months to complete.
Other key findings
- Only a small proportion of death benefit claims lead to a dispute with the insurer. Additionally, the incidence of claims disputes (disputes per 100,000 lives insured) is much lower for insurance inside superannuation than outside. For example, to June 2024 there was only one death benefit dispute per 100,000 lives insured from fund members covered by group insurance, while 41 per 100,000 covered came from those with individual cover.
- Around 23 per cent of fund members opted for higher cover than default levels.
“It is pleasing to see the growth of coverage for people. What this means is that more Australians have their lives and livelihoods protected, and this provides great relief for families. Of course, it also provides relief to the social security system that would otherwise be under greater pressure without these levels of cover,” Ms Delahunty said.
For further information, please contact:
ASFA Media Manager Richard Garfield, 0451 949 300.
About the Association of Superannuation Funds of Australia (ASFA)
ASFA, the voice of super, has been operating since 1962 and is the peak policy, research and advocacy body for Australia’s superannuation industry. ASFA represents the APRA regulated superannuation industry with over 100 organisations as members from corporate, industry, retail and public sector funds, and service providers. We develop policy positions through collaboration with our diverse membership base and use our deep technical expertise and research capabilities to assist in advancing outcomes for Australians.
We unite the superannuation community, supporting our members with research, advocacy, education and collaboration to help Australians enjoy a dignified retirement. We promote effective practice and advocate for efficiency, sustainability and trust in our world-class retirement income system.
