Insurance in super creating false security

Insurance policies included in superannuation have increased the overall coverage of working Australians but insufficient default levels of insurance in many cases are creating a false sense of security, according to Lifebroker research.

The amount members are likely to receive in claims have actually lowered, with some default policies providing amounts as low as $7000, according to the survey of 1,000 Australians.

The figures showed 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.

Superannuation actually had a counteractive effect in many instances, causing people to accept lower levels of coverage, reducing the amounts they will receive in claims, and leaving them with a false sense of security, Eade said.