Inadequate income and life insurance policies included in superannuation may actually be having a negative effect on the insurance coverage of many Australians, according to Lifebroker research.
Default levels of insurance in many cases are insufficient and may also be preventing members from seeking a higher, more adequate level of coverage, according to the survey of 1,000 Australians.
Although personal insurance coverage has increased due to superannuation, the amount members are likely to receive in claims has actually lowered, with some default policies providing amounts as low as $7000, the figures showed.
According to the research, 49 per cent of Australians now have some form of life insurance with 24 per cent acquiring it through superannuation, while 21 per cent have income insurance including nine per cent through superannuation.
“The compulsory nature of superannuation has left many thinking they automatically have personal insurance and at adequate levels,” managing director of Lifebroker Chris Eade said.
Three quarters of respondents falsely believed they automatically had life insurance through their superannuation, and of those that had life and income protection insurance through superannuation, 62 per cent and 48 per cent respectively, accepted the default amount, he said.
Eade warned Australians not to be complacent about the risks of injuries, illnesses on their finances and to review their personal insurance needs as soon as possible.
The insurance company has joined this year’s awards as a principal partner.
The $135 billion fund has transitioned away from TAL Life Insurance following an “extensive tender process”.
The $80 billion fund is facing legal action over allegedly signing up new members to income protection insurance by default without active member consent.
In a Senate submission, the Financial Services Council has once again called for further clarification that the government will assess the consumer outcomes of group insurance against the enshrined objective of superannuation.