One-Size-Fits-None: The Problem with Default Life Cover

Written by Christopher Hall, AdvDipFP | Authorised Representative, AFSL 526688 | August 2025

Group insurance provided through superannuation may seem convenient and cost-effective, but without professional guidance, it can leave significant gaps in your protection. Many Australians rely on this default cover, yet few realise it often lacks tailored features like occupation-specific definitions, adequate benefit periods, and proper underwriting - until they try to make a claim.

In fact, research from ASIC and APRA has shown that over 50% of default life insurance policies in superannuation contain exclusions that can render them ineffective for certain high-risk jobs or mental health conditions. Claims for mental health, for example, are rising rapidly - more than $2.2 billion in life insurance claims were paid in 2023 for mental illness, a near doubling from five years ago. For those in their 30s, total and permanent disability (TPD) claims related to mental health have increased 732% over the past decade.

Crucially, group cover is usually “auto-accepted,” meaning there's no medical underwriting at the time of joining. But that underwriting does happen at claim time, often resulting in delays or outright denials. A 2024 ASIC investigation found that 78% of delays in death benefit payments were due to processing issues entirely within trustees’ control.

By working with a qualified financial adviser, you can secure bespoke insurance tailored to your occupation, lifestyle, and health. Advisers help navigate complex exclusions, align cover with your income needs, and ensure you aren’t left exposed during critical moments. When it comes to protecting your future, personalised advice isn’t a luxury, it’s a necessity.

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About the Author

Christopher Hall, AdvDipFP, is the principal financial adviser at Arrow Equities and an Authorised Representative under AFSL 526688. He has completed more than 500 life insurance policy reviews for Australian families, with a specialisation in life risk insurance.

Educational Disclaimer: This content is for educational purposes only and does not constitute financial advice. Past performance is no guarantee of future results.

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