Holding insurance inside super is convenient and cashflow-friendly — but it comes with traps that can leave you uncovered or out of pocket exactly when it matters. Know these before you rely on it.
1. Your cover can be switched off
Under the Protecting Your Super rules, insurance is cancelled if your account is inactive for 16 months (no contributions) unless you elect to keep it. Change jobs or consolidate and your old cover can quietly lapse.
2. New accounts may have no default cover
Under Putting Members’ Interests First, default insurance isn’t provided to new members under 25 or with a balance under $6,000 unless you opt in — so younger members can assume they’re covered when they’re not.
3. It erodes your retirement savings
Premiums come out of your balance every month. Modest on its own, but over decades it’s a real drag on your final super.
4. Duplicate cover across funds
If you have several super accounts, you may be paying for duplicate insurance you can’t fully claim on — a common and avoidable waste when you consolidate.
Frequently asked questions
Can my super insurance be cancelled?
Yes - under the Protecting Your Super rules, cover is cancelled if your account is inactive (no contributions) for 16 months, unless you elect to keep it. Job changes and consolidation are common triggers.
Do young people get default cover?
Not automatically - default insurance isn’t provided to new members under 25 or with balances under $6,000 unless they opt in, under the Putting Members’ Interests First rules.
Am I paying for duplicate insurance?
If you hold multiple super accounts, you may be paying premiums on cover in each - but you often can’t claim the full amount. Consolidating removes the waste, but check you’re not cancelling cover you need first.
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