Australia has a well-documented underinsurance problem — most people carry far less cover than their family would actually need, largely because they assume the default cover in super has them sorted. It usually doesn’t.
Why the gap exists
- Default cover is set at a generic, modest level — not tailored to your mortgage, income or dependants.
- It can be cancelled without you noticing (see the traps below), leaving you with nothing.
- Life events — a mortgage, kids, a pay rise — increase your needs, but your cover doesn’t move with them.
Signs you may be underinsured
- You have a mortgage or dependants but have never checked your cover amount.
- Your only insurance is the default in your super.
- Your income or debts have grown since you last looked.
- You’ve changed jobs or funds and aren’t sure your cover carried across.
Frequently asked questions
How do I know if I’m underinsured?
Add up what your family would need - debts, income replacement, future costs - and compare it to your existing cover. If your only insurance is the default in your super and you have a mortgage or dependants, you’re very likely short.
Isn’t my super cover enough?
For many people it isn’t - default cover is a modest, generic amount, and it can be cancelled if your account goes inactive. It’s a starting point, not a tailored plan.
What should I do about it?
Quantify your real need, check what you already hold (including default cover), and top up the gap with the right structure. A review makes the number concrete.
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