A recent survey conducted by Super Consumers Australia indicates that approximately one in four Australians are unaware of their insurance coverage options within their superannuation funds.

This survey, which included responses from 1,526 individuals aged between 18 and 75, reveals that a significant portion of the population either does not know what their insurance is (9%) or is unsure whether they hold any insurance (19%).

The research suggests a troubling trend: individuals are often only discovering the limitations of their coverage at the time of making a claim, particularly during critical health challenges.

The experiences of Lyndal Jordon, who was diagnosed with gastric cancer in 2022, exemplify the frustrations faced by many.

Jordon, who had contributed to Aware Super for over 11 years, believed she had secured adequate insurance coverage.

However, upon receiving lower than expected income protection and terminal illness payments, she found her coverage was at a default level, leading to financial and emotional strain during a critical time in her life.

In 2023-24, Australians are anticipated to pay a total of $6.8 billion for insurance through their superannuation funds.

However, the lack of clarity regarding these policies is a systemic issue.

The Pulse survey highlighted that more than half of the respondents aged 25 to 29 do not realize that default insurance generally begins at age 25.

Aware Super, which manages approximately $180 billion in assets, confirmed that Jordon’s coverage was at a default level.

They expressed regret for the difficulties she faced in processing her claims, stating that they strive to quickly pay out claims and keep members informed throughout the process.

However, Jordon contends that she was not adequately informed about her insurance status—specifically, that she reverted to a default policy following mergers of her superannuation fund.

She claims lack of communication and transparency resulted in confusion regarding her policy, which was further complicated by mergers involving Aware Super and other industry funds.

Calls for a comprehensive review of superannuation insurance have gained momentum.

Xavier O'Halloran, CEO of Super Consumers Australia, stated the need for a Productivity Commission review to ensure the insurance coverage meets the needs of Australians.

Meanwhile, the Australian Securities and Investments Commission (ASIC) is currently investigating major super funds, including Australian Super and Cbus, regarding their administration of death and disability claims.

Reports have emerged of thousands of delayed claims, prompting government officials to urge superannuation funds to enhance customer service.

The ongoing situation raises questions about the adequacy of communication from superannuation funds and the potential need for legislative measures to standardize claims processing and improve information transparency for consumers.

Jordon’s experience underscores the broader issue many Australians face: the misunderstanding of insurance coverage tied to superannuation, emphasizing the importance of clarity and better support mechanisms during vulnerable times.