The Fine Print Australia · PUBLISHED 27 JUN 2026 · VERIFIED 27 JUN 2026 · AU EDITION

Is Your Super Quietly Paying for Insurance You Never Asked For? 🇦🇺

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Australians under 30 in super can be automatically charged insurance even if they never asked for it, and for many low-balance accounts the premium can consume a large share of contributions before retirement savings start compounding.

The number that matters

8.8M Australians hold life insurance through their super fund, which is the scale of the default-cover market this story is about.

How it quietly costs you

The first hidden cost is automatic default insurance inside super, where cover is often provided unless members actively opt out, so premiums keep reducing the account balance even when the cover is no longer suitable. The impact is that super contributions are diverted into insurance instead of investment returns, and the channel is especially expensive when the cover is held for years without review.

The best documented comparison in the available results is that blue-collar premiums can cost up to 69% more than white-collar premiums, showing how occupation-based pricing can quietly lift the cost of the same style of cover.

The second, compounding trap

A second compounding layer is premium escalation and poor personal fit, where premiums rise with age, policy design, or risk category while the member’s balance may still be small. That means the cost of doing nothing is not just today’s premium; it is the lost compounding on every dollar diverted from the super account over many years.

A concrete example from member reports is that some AustralianSuper members saw increases such as TPD up 340%, death cover up 250%, and income protection up 30%, illustrating how quickly the cost can jump when a fund reprices group insurance.

What this looks like in practice

Mia, 29, retail supervisor, earning $68,000, with $27,000 in super, default MySuper account, and 36 years to retirement.

• She discovers her super insurance is not “free”; AustralianSuper members reported increases like 9% overall, 16% death cover, 38% TPD, and other large hikes, so her premium can rise even if her cover stays the same.
• She discovers occupation and classification matter: blue-collar pricing can be up to 69% higher than white-collar pricing for comparable cover, so two workers can pay very different premiums for similar protection.
• She discovers scale matters: with 8.8M Australians holding life insurance through super, default cover is widespread, but “common” does not mean “optimal,” especially for a younger member whose balance is still building.

The full cost of doing nothing

For Mia, the combined lifetime drag is the sum of lost investment growth from premiums paid out of super plus higher premiums from repricing and occupation-based cost differences. A conservative modelling basis is: small early-balance super account, decades of compounding, and premiums that are materially higher than a benchmark white-collar equivalent; the available sources support the direction and magnitude of the problem but do not provide a single official lifetime-dollar estimate.

What to do about it

• Check your insurance settings in your super account and compare them against your current needs using your fund’s online portal and member statements.

• Use the fund’s member login and insurance menu to find current death, TPD, and income protection cover.

• Note the premium deducted per pay cycle or per month.

• Compare that cost to your balance and contributions.

• Good looks like: cover that is intentional, affordable, and not eating an outsized share of contributions.

• Review your super using the ATO online services / myGov account to confirm your fund, balance, and contribution flow.

• Sign in to myGov and open ATO online services.

• Check your super accounts and balances.

• Compare insurance deductions against contributions and balance size.

• Good looks like: premiums that are clearly justified by your stage of life and dependants.

• Compare your super insurance with an official comparison tool such as YourSuper where applicable, then check whether the fund’s default insurance is competitive.

• Open the comparison tool and identify your product’s fees and features.

• Compare insurance-related deductions and fund costs.

• Check whether another MySuper option has lower ongoing drag.

• Good looks like: lower total annual deductions and a fund that still provides the cover you actually need.

A myth worth clearing up

Myth: Default insurance in super is effectively free and should be left alone.

Fact: Premiums are paid from your super balance, so every dollar used for insurance is a dollar not invested for retirement; member reports and fund disclosures show that those premiums can also rise sharply over time.

Corrections & disclosure: an AI-assisted, human-reviewed guide. Every figure is dated and sourced above. Spot something out of date or wrong? Tell us and we’ll correct it — corrections are noted here and in the video description.