In this guide
- A period of upheaval
- Premiums vary widely
- The impact of fees
- Super funds with lowest life and TPD insurance premiums: 45-year-old female
- Super funds with lowest life and TPD insurance premiums: 55-year-old female
- Super funds with lowest life and TPD insurance premiums: 45-year-old male
- Super funds with lowest life and TPD insurance premiums: 55-year-old male
Life insurance premiums inside superannuation showed little or no increase in 2023, providing a welcome reprieve for super fund members.
This modest growth in premiums for life and total and permanent disability (TPD) cover followed a price spike in the wake of COVID-19, as insurers anticipated a rise in pandemic-related claims.
As it turned out, the actual claims experience was lower than expected. Joshua Lowen, insights manager at superannuation research house SuperRatings, says many funds that increased premiums early in the pandemic are now delivering some premium relief.
A period of upheaval
COVID-19 wasn’t the only factor putting upward pressure on life and TPD insurance premiums in recent years.
In 2020, high uptake of the early release of super provisions due to COVID left some members with little or no money left in super and hence no default insurance cover.
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This came on the heels of legislation making insurance opt-in for young members, inactive accounts and low balance accounts.
These changes effectively reduced the number of members with insurance cover and premium revenue, making premiums more expensive for everyone else as cross subsidies were removed.
According to SuperRatings research, in June 2019 the median super fund had 68% of members with life and TPD insurance. By June 2023, only 45.7% of members had life and TPD insurance – a huge drop in coverage.
Even so, most Australians with life insurance still hold it within their super account.
Premiums vary widely
To gauge trends in insurance premiums and identify the cheapest funds for insurance, SuperRatings surveys premiums for 45 and 55-year-old male and female white-collar workers.
The latest figures from SuperRatings as at November 2023 show average premiums for combined life and TPD insurance, which are typically bundled for members with default cover, increased by 1.5% or less over the year. In some cases, they fell slightly!
Life insurance premiums vary widely, depending on your age (premiums rise with age), gender, smoker or non-smoker and the risk rating of your employment. So a young, non-smoking female working in an office will pay less than an older male smoker working on construction sites.
Premiums also vary depending on whether your insurance is automatically attached to your super account on a default basis, or you make voluntary payments for cover.
As the tables below show, the highest average premium increase was for 45-year-old females, up a modest 1.5% from $1.87 per $1,000 in cover in 2022 to $1.90 in 2023. The big winners were 55-year-old males, with a fall in average premiums of 0.33% from $6.05 per $1,000 cover to $6.03. This group also had the lowest increase between 2019 (pre-COVID) and 2023 of 6.9%.
The cheapest premiums on offer were for 45-year-old men and women – 87c per $1,000 of cover from Super SA – Triple S Scheme for South Australian public sector workers.
Despite industry funds’ reputation for lower fees, the top 20 cheapest funds are split fairly evenly between retail and industry super funds.
Lowen says retail funds have stepped up their cover in recent years in terms of cost competitiveness. However, he says life/TPD cover from retail funds tends to be more complex, with more exclusions than industry funds which generally offer less tailored, more generic cover.
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This underlines the importance of checking which medical conditions are covered and which are excluded when you compare policies. For example, a rising number of claims are being made for mental health conditions – 26% in 2023. This trend was evident for income protection claims first, and picked up in the wake of COVID. Lowen says mental health issues may be moving from short-term (covered by income protection) to long-term disability resulting in a TPD claim.
The impact of fees
While insurance through super may offer good value because it’s negotiated at group rates, it’s important to know if you are getting a good deal, and one that is appropriate to your needs.
It’s important to note that because insurance premiums are taken directly from your super balance, they eat into the overall returns you could be getting and how much super you will have to fund your retirement.
On the flip side, the cheapest policy is not necessarily best if it doesn’t provide the type and amount of cover you and your family require, or doesn’t pay out when you need it most.
In the tables below you can discover which super funds offer the lowest rates for combined life insurance and TPD insurance, and we’re grateful to SuperRatings for providing this information. You will also find the average premium at the bottom of each table so you can see where your insurance sits in the market. Note that all lists are based on a low-risk, white-collar employee.
Super funds with lowest life and TPD insurance premiums: 45-year-old female
| Super fund and product | Cost per $1,000 |
|---|---|
| Super SA – Triple S Scheme | $0.87 |
| AMG Super – Personal | $1.04 |
| netwealth Super Accelerator Core – Personal Super | $1.04 |
| ESSSuper – Accumulation Plan | $1.13 |
| HUB24 Super Fund – Personal Super (Choice Menu) | $1.16 |
| Maritime Super – Accumulation Advantage | $1.27 |
| Equip Super – MyFuture | $1.27 |
| Prime Super | $1.27 |
| AvSuper – Corporate | $1.31 |
| UniSuper Accumulation Super (1) | $1.33 |
| Australian Ethical Retail Super Fund – Personal | $1.34 |
| Virgin Money Super | $1.34 |
| Catholic Super | $1.40 |
| Perpetual Select Superannuation Plan | $1.40 |
| FirstWrap Plus Super | $1.41 |
| Mercer Portfolio Super Account – Category 2 | $1.41 |
| NGS Super – Industry Plan | $1.41 |
| OnePath OneAnswer Frontier Personal Super | $1.41 |
| Hostplus Superannuation Fund | $1.44 |
| Nucleus Super | $1.44 |
| Average 2023 | $1.90 |
| Average 2022 | $1.87 |
| % Difference | 1.55% |
Source: SuperRatings
Super funds with lowest life and TPD insurance premiums: 55-year-old female
| Super fund and product | Cost per $1,000 |
|---|---|
| Mine Super | $2.14 |
| Super SA – Triple S Scheme | $2.17 |
| Prime Super | $2.89 |
| TWUSUPER – Industry | $3.11 |
| ESSSuper – Accumulation Plan | $3.22 |
| legalsuper | $3.34 |
| AMG Super – Personal | $3.40 |
| NGS Super – Industry Plan | $3.73 |
| Australian Food Super Employer | $3.85 |
| Australian Ethical Retail Super Fund – Personal | $3.86 |
| UniSuper Accumulation Super (1) | $3.92 |
| AvSuper – Corporate | $3.95 |
| Maritime Super – Accumulation Advantage | $4.00 |
| netwealth Super Accelerator Core – Personal Super | $4.05 |
| Equip Super – MyFuture | $4.07 |
| HUB24 Super Fund – Personal Super (Choice Menu) | $4.11 |
| Virgin Money Super | $4.15 |
| Future Super | $4.54 |
| Perpetual WealthFocus Super Plan | $4.59 |
| Living Super | $4.64 |
| Average 2023 | $5.47 |
| Average 2022 | $5.47 |
| % Difference | 0.01% |
Source: SuperRatings
Super funds with lowest life and TPD insurance premiums: 45-year-old male
| Super fund and product | Cost per $1,000 |
|---|---|
| Super SA – Triple S Scheme | $0.87 |
| ESSSuper – Accumulation Plan | $1.13 |
| netwealth Super Accelerator Core – Personal Super | $1.18 |
| Maritime Super – Accumulation Advantage | $1.27 |
| Equip Super – MyFuture | $1.27 |
| Prime Super | $1.27 |
| HUB24 Super Fund – Personal Super (Choice Menu) | $1.32 |
| UniSuper Accumulation Super (1) | $1.33 |
| Virgin Money Super | $1.34 |
| AMG Super – Personal | $1.39 |
| Catholic Super | $1.40 |
| NGS Super – Industry Plan | $1.41 |
| Hostplus Super Fund | $1.44 |
| legalsuper | $1.45 |
| AvSuper – Corporate | $1.54 |
| OnePath OneAnswer Frontier Personal Super | $1.59 |
| Nucleus Super | $1.62 |
| FirstWrap Plus Super | $1.69 |
| Mercer Portfolio Super Account – Category 2 | $1.69 |
| Perpetual WealthFocus Super Plan | $1.70 |
| Average 2023 | $2.06 |
| Average 2022 | $2.04 |
| % Difference | 0.98% |
Source: SuperRatings
Super funds with lowest life and TPD insurance premiums: 55-year-old male
| Super fund and product | Cost per $1,000 |
|---|---|
| Super SA – Triple S Scheme | $2.17 |
| Mine Super | $2.78 |
| Prime Super | $2.89 |
| TWUSUPER – Industry | $3.11 |
| ESSSuper – Accumulation Plan | $3.22 |
| legalsuper | $3.34 |
| NGS Super – Industry Plan | $3.73 |
| Australian Food Super Employer | $3.85 |
| UniSuper Accumulation Super (1) | $3.92 |
| Maritime Super – Accumulation Advantage | $4.00 |
| Equip Super – MyFuture | $4.07 |
| Virgin Money Super | $4.15 |
| AMG Super – Personal | $4.26 |
| HUB24 Super Fund – Personal Super (Choice Menu) | $4.56 |
| First Super – Industry | $4.70 |
| AvSuper – Corporate | $4.74 |
| netwealth Super Accelerator Core – Personal Super | $4.81 |
| AustralianSuper | $5.08 |
| FirstWrap Plus Super | $5.41 |
| Mercer Portfolio Super Account – Category 2 | $5.41 |
| Average 2023 | $6.03 |
| Average 2022 | $6.05 |
| % Difference | -0.33% |
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 deciding on a financial product.
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