In this guide
- A period of upheaval
- Premiums vary widely
- The impact of fees
- Super funds with lowest life and TPD insurance premiums: 45-year-old female
- Super funds with lowest life and TPD insurance premiums: 55-year-old female
- Super funds with lowest life and TPD insurance premiums: 45-year-old male
- Super funds with lowest life and TPD insurance premiums: 55-year-old male
Life insurance premiums inside superannuation showed little or no increase in 2023, providing a welcome reprieve for super fund members.
This modest growth in premiums for life and total and permanent disability (TPD) cover followed a price spike in the wake of COVID-19, as insurers anticipated a rise in pandemic-related claims.
As it turned out, the actual claims experience was lower than expected. Joshua Lowen, insights manager at superannuation research house SuperRatings, says many funds that increased premiums early in the pandemic are now delivering some premium relief.
A period of upheaval
COVID-19 wasn’t the only factor putting upward pressure on life and TPD insurance premiums in recent years.
In 2020, high uptake of the early release of super provisions due to COVID left some members with little or no money left in super and hence no default insurance cover.
This came on the heels of legislation making insurance opt-in for young members, inactive accounts and low balance accounts.
These changes effectively reduced the number of members with insurance cover and premium revenue, making premiums more expensive for everyone else as cross subsidies were removed.
According to SuperRatings research, in June 2019 the median super fund had 68% of members with life and TPD insurance. By June 2023, only 45.7% of members had life and TPD insurance – a huge drop in coverage.
Need to know:Â Protecting Your Super reforms
The Protecting Your Super/Putting Members’ Interests First legislation, which came into force on 1 July 2019, was designed in part to protect super accounts from being eroded by unnecessary insurance premiums.
Under the reforms, members aged under 25 are not automatically covered but must ‘opt in’ if they wish to receive default life and TPD cover.
Super funds are also required to cancel insurance cover if an account is deemed inactive – which is generally where no contributions have been received for more than 16 months – or has a balance of less than $6,000.
Even so, most Australians with life insurance still hold it within their super account.
