On this page
- What does income protection cover?
- Understand your existing cover
- The cost of IP rises sharply
- Premiums vary widely
- Super funds with lowest income protection insurance premiums: 45-year-old female
- Super funds with lowest income protection insurance premiums: 55-year-old female
- Super funds with lowest income protection insurance premiums: 45-year-old male
- Super funds with lowest income protection insurance premiums: 55-year-old male
Paying too much for income protection insurance inside your super fund can cost you dearly, eating into your retirement savings without necessarily improving your cover.
Income protection (IP) insurance (sometimes called salary continuance insurance) is available through some super funds as default cover. It is one of three kinds of insurance available inside super, alongside life and TPD, but it is the least common (and most expensive).
What does income protection cover?
Income protection insures against the risk that you are unable to earn an income for a specified period (this might be two years, five years or up to a certain age) due to an injury or illness. However, IP does not cover you for redundancy.
Super funds vary in their terms and conditions, but generally you can get IP if you are under age 65 and at least age 15.
The maximum amount you can insure is 85% of your pre-tax (and pre-disability) salary, or up to a monthly figure of $25,000 or $30,000 typically. That 85% would include an amount for super, which would be paid into your super account, while the rest of the benefit is paid to your bank account.
Understand your existing cover
There have been big changes to insurance in super over the past four years, with a flurry of legislation including the Protecting Your Super and Putting Members’ Interests First.
This followed findings by the Productivity Commission and others highlighting a high number of unintended or duplicate policies and a general lack of awareness by fund members about the type and level of cover held.
Following these legislative changes, research by KPMG forecast that fewer members holding insurance cover would push up premiums for everyone else by up to 26%. Unfortunately, they were right.
What’s more, since then the large number of members taking advantage of temporary rules allowing the early release of super due to COVID-19 meant the level of insurance cover inside super dropped even further.
The cost of IP rises sharply
The cost of income protection has increased far more than life or TPD cover, according to SuperRatings’ latest annual survey of insurance premiums in super.
SuperRatings head of market insights Joshua Lowen says the pool of insured members has decreased due to legislation which has reduced revenue and put pressure on premiums for existing members as a result.
This is certainly the case for life insurance and TPD insurance coverage. Lowen says the median super fund had 45.7% of members with this type of cover in June 2023, down from 68% four years earlier.
While SuperRatings doesn’t have historical data for income protection coverage, it found the median super fund had just 8.1% of members with this type of insurance as at June 2023.
“So far we have seen small increases across life/TPD premiums but material rises are evident for IP.” He puts this down to IP already containing a smaller pool of members than life/TPD, “as well as the rise in mental health claims which seem to be impacting IP more than death/TPD.”
Premiums vary widely
To gauge market trends, SuperRatings surveys IP premiums for four groups – male and female non-smokers in white collar jobs aged 45 and 55.
Premiums vary widely depending on a range of factors including your age, gender, smoker or non-smoker status, and the risk rating of your occupation. So a young female non-smoker who works in an office will pay less than an older male smoker who works on construction sites.
Premiums also vary depending whether you have default cover attached to your super account or you take out voluntary cover.
SuperRatings found that average premiums for IP for the four groups surveyed increased between 7.6% and 9.5% in the year to November 2023. However, average IP premiums soared more than 54% for 55-year-old men and women between 2019 and 2023, and 46–49% for 45-year-olds.
The smallest average annual increase in 2023 was for 45-year-old females, up 7.6% from $12.21 per $1,000 in cover in 2022 to $13.13 per $1,000 cover in 2023. The biggest increase was for 55-year-old men, up 9.5% from $19.54 per $1,000 in cover to $21.49 per $1,000 in cover over the same period. However, women the same age paid significantly more for cover – $30.48 per $1,000 in cover in 2023, up from $27.94 in 2022.
Even so, some providers have kept premiums steady. This may be a bid to retain and attract members, or some funds may still be within a rate guarantee period. It is common for super funds to sign up for group insurance with an insurance provider for a specified time – it might be two or three years – with a rate guarantee for that period. Premiums are renegotiated when the guarantee period ends.
In 2023 AMG Super (a retail super platform that recently re-branded to Acclaim Wealth) offered the cheapest IP premiums for men, regardless of age. Catholic Super and UniSuper were the cheapest providers for women.
As with most financial matters, it pays to be informed. In the tables below you can discover which super funds offer the lowest rates for income protection insurance, and we’re grateful to SuperRatings for providing this information. Average premiums for each category are included so you can see how your existing IP cover compares.
Note that all lists are based on a white-collar employee, with a 60-day wait period and a two-year benefit period. Premiums for hazardous occupations are generally higher and cover may be limited.
| Super fund and product | Cost per $1,000 |
|---|---|
| Catholic Super | $2.73 |
| UniSuper Accumulation Super (1) | $2.99 |
| Vision Super | $3.47 |
| AustralianSuper | $3.51 |
| AMG Super – Personal | $3.58 |
| ESSSuper – Accumulation Plan | $3.74 |
| First Super – Industry | $4.08 |
| Aware Super Future Saver | $4.23 |
| lPerpetual Select Superannuation Plan | $4.50 |
| TWUSUPER – Industry | $4.90 |
| legalsuper | $4.90 |
| CareSuper | $5.02 |
| Plum Personal Plan | $5.26 |
| Hostplus Super Fund | $5.30 |
| Equip Super – MyFuture | $5.59 |
| REI Super | $5.64 |
| Australian Ethical Retail Super Fund – Personal | $6.17 |
| Prime Super | $6.22 |
| Spirit Super | $6.23 |
| Australian Defence Force Superannuation | $6.27 |
| Average 2023 | $13.13 |
| Average 2022 | $12.21 |
| % Difference | 7.58% |
Source: SuperRatings
| Super fund and product | Cost per $1,000 |
|---|---|
| UniSuper Accumulation Super (1) | $6.75 |
| AustralianSuper | $6.89 |
| ESSSuper – Accumulation Plan | $7.52 |
| Catholic Super | $7.71 |
| Vision Super Saver | $7.97 |
| First Super – Industry | $7.98 |
| AMG Super – Personal | $8.03 |
| legalsuper | $9.57 |
| Perpetual Select Superannuation Plan | $9.69 |
| Equip Super – MyFuture | $10.28 |
| Hostplus Superannuation Fund | $10.40 |
| Care Super | $10.69 |
| TWUSUPER – Industry | $11.74 |
| REI Super | $11.78 |
| Aware Super Future Saver | $12.32 |
| Prime Super | $12.49 |
| Spirit Super | $13.25 |
| Australian Ethical Retail Superannuation Fund – Personal | $13.27 |
| Plum Personal Plan | $13.29 |
| Mine Super | $14.21 |
| Average 2023 | $30.48 |
| Average 2022 | $27.94 |
| % Difference | 9.12% |
Source: SuperRatings
| Super fund and product | Cost per $1,000 |
|---|---|
| AMG Super – Personal | $2.44 |
| Catholic Super | $2.73 |
| Perpetual Select Superannuation Plan | $2.77 |
| CareSuper | $2.92 |
| UniSuper Accumulation Super (1) | $2.99 |
| First Super – Industry | $3.20 |
| Plum Personal Plan | $3.35 |
| Vision Super Saver | $3.47 |
| AustralianSuper | $3.51 |
| Living Super | $3.62 |
| ESSSuper – Accumulation Plan | $3.74 |
| Australian Ethical Retail Superannuation Fund – Personal | $3.80 |
| legalsuper | $3.80 |
| Equip Super – MyFuture | $3.99 |
| Prime Super | $4.10 |
| Bendigo SmartStart Super | $4.13 |
| Hostplus | $4.15 |
| Aware Super Future Saver | $4.23 |
| Australian Retirement Trust – Super Savings – Accumulation Account | $4.36 |
| RLA Personal Super Plan | $4.60 |
| Average 2023 | $8.95 |
| Average 2022 | $8.26 |
| % Difference | 8.37% |
Source: SuperRatings
| Super fund and product | Cost per $1,000 |
|---|---|
| AMG Super – Personal | $5.86 |
| UniSuper Accumulation Super (1) | $6.75 |
| Australian Super | $6.89 |
| Perpetual Select Superannuation Plan | $6.94 |
| First Super – Industry | $7.32 |
| CareSuper | $7.34 |
| ESSSuper – Accumulation Plan | $7.52 |
| Catholic Super | $7.71 |
| Equip Super – MyFuture | $7.85 |
| Vision Super Saver | $7.97 |
| legalsuper | $8.48 |
| Plum Personal Plan | $8.86 |
| Prime Super | $9.04 |
| Living Super | $9.18 |
| Australian Ethical Retail Superannuation Fund – Personal | $9.50 |
| Hostplus Superannuation Fund | $9.53 |
| Australian Retirement Trust – Super Savings – Accumulation Account | $9.68 |
| RLA Personal Super Plan | $10.00 |
| Mine Super | $10.19 |
| Bendigo SmartStart Super | $11.14 |
| Average 2023 | $21.49 |
| Average 2022 | $19.64 |
| % Difference | 9.45% |
Source: SuperRatings
Disclaimer: The information used in compiling this data comes from sources considered reliable and is not guaranteed to be accurate or complete. This information is general in nature and is not intended to be a recommendation for a particular financial product, or a type of financial product in general. We recommend you seek independent financial advice before decidin on a financial product.
Leave a comment
You must be a SuperGuide member and logged in to add a comment or question.