Rising Insurance Premiums in Super: Time for a Proper Review? Why the latest industry fund increases are a wake-up call — not a reason to sit tight

Written by Shara Cox & Steve Landers

If you hold insurance through your superannuation, it's time to pay attention. Australia's largest industry super funds are announcing significant premium increases, and for many members, the cover they've been passively relying on is about to cost a lot more — while still not necessarily being the right fit.

What's happening right now

AustralianSuper — Australia's largest super fund — is increasing premiums sharply, driven by a surge in mental health and disability claims, particularly among younger members unable to return to work. TPD (Total & Permanent Disability) cover is rising by an average of 40%, death cover by 20%, and two-year income protection premiums by 38%.

Across the broader super landscape, other funds are moving in the same direction, with some signalling rises of around 10% after several years without changes. This isn't a one-off blip — it reflects a structural shift in claims experience that is reshaping the economics of group insurance in super.

Why default super cover has always had limitations

Even before these increases, group insurance inside super was never a perfect solution. It's designed to be a one-size-fits-all safety net — not a tailored strategy. Default cover typically offers:

  • Fixed benefit amounts that may not reflect your actual income or debt levels

  • Standardised definitions that can be harder to claim on than retail policies

  • No adviser advocacy if a claim is disputed

  • Income protection limited to two years in many funds, whereas retail policies can cover you to age 65

And critically, every dollar deducted in premiums reduces your retirement savings and the compounding growth on them— meaning you're paying more now for cover that may still fall short.

The case for retail insurance

Retail insurance — held personally or through a financial adviser — offers something group cover fundamentally cannot: a policy built around you. With retail cover you can:

  • Lock in agreed value or indemnity income protection suited to your earnings

  • Choose benefit periods that extend to age 65 or 70

  • Access policy definitions that are often broader and more claimant-friendly

  • Hold cover independently of your super fund, so it isn't affected by fund changes, insurer contract changes, or your employment situation

  • Are often cheaper as they are priced on your individual health and lifestyle choices. With the 20–40% rise in Group cover, this is now more pronounced.

Don't cancel — but don't assume your super cover is enough either

A common reaction to rising premiums is to cancel cover and hope for the best. That's rarely the right answer. But equally, simply accepting increased deductions from your super without reviewing whether the cover is appropriate for your situation is also a mistake.

A proper review should ask:

  • Are the benefit amounts inside super actually enough to protect your lifestyle?

  • Is your income protection only covering you for two years — when a serious illness or injury could sideline you for far longer?

  • Are you duplicating cover, or worse, have gaps between what your super provides and what you actually need?

  • Could a retail policy give you better definitions, longer benefit periods, and greater certainty — potentially at a competitive cost given where group premiums are heading?

Contact us at Salt Financial Group to review your insurance and make sure your cover still works for you — not just your super fund.

Jenni Anderson