Superannuation Influencing Life Insurance Cover

Superannuation has had a positive effect on the uptake of life insurance but has also reduced the amount Australians are likely to receive in claims, according to survey findings.

The Lifebroker life insurance report was conducted in 2010 and included interviews with 1,000 adult Australians.

Lifebroker said superannuation had clearly increased the uptake of life and income insurance products.

Forty nine per cent of Australians now have some form of life insurance including 24 per cent through superannuation, while 21 per cent have income insurance including nine per cent through superannuation.

But Lifebroker warned that the availability of personal insurance through superannuation had a hidden downside.

“The compulsory nature of superannuation has left many thinking they automatically have enough personal insurance.

Worryingly the survey found that 77 per cent falsely believed they automatically have life insurance through their superannuation.

A further 62 per cent who had life insurance through superannuation and 48 per cent who had income protection insurance through superannuation, accepted the default amount of cover offered.

Default levels of life and income protection insurance offered through superannuation are often insufficient with some superannuation life insurance policies providing default amounts as low as $7000. Many income protection policies provided through superannuation had limitations including on the period of cover.

Lifebroker stated superannuation has had a counteractive effect in many instances, causing people to accept lower levels of coverage and reducing the amounts they will receive in claims.

Lifebroker warned Australians not to be complacent about the risks of injuries, illnesses on their finances and to review their personal insurance as soon as possible.