The Association of Superannuation Funds of Australia has analysed historical opt-in rates of life and total and permanent disability insurance and compared it with current levels of Australians’ coverage through their super. It has found that an extra 6 million Australians are protected.
As the cost-of-living crisis continues, ASFA said this critical protection has no impact on household spending as it is included in superannuation.
“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,” chief executive Mary Delahunty said.
The 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.
The research drew on recently published APRA data and found that the number of insured people is growing, with 8.8 million Australians now protected by life insurance through their super, up from 8.5 million the year before.
It also showed that 8.1 million are protected for total and permanent disability through insurance, up from 7.6 million.
APRA’s data also shows that group cover through superannuation resulted in $1.7 billion in death benefit payments and $3 billion in total and permanent disability payments in 2023–24.
There were also Improved claims handling time frames, with insurers processing 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 per cent) of death benefit claims were finalised by insurers within two months, with only 1 per cent taking longer than 12 months to complete.
The research also revealed that 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 and 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,” Delahunty said.
