First published in the Australian Financial Review on 6 August 2025.

The ability to earn an income is the foundation of financial security for most working Australians, yet it’s often the asset left most exposed. Indeed, almost 80 per cent of working Australians have car insurance, but only one third have life insurance.

This highlights Australia’s increasing underinsurance issue and the disparity in how we think about our most valuable assets. Cars are tangible and any damage to them is likely visible.

Unlike our physical assets, our capacity to earn an income is less apparent, but arguably more important.

Thanks to Australia’s superannuation system, more than eight million people hold life insurance through super, often by default. Without it, more than six million people would likely have no insurance cover at all – that’s according to the Association of Superannuation Funds of Australia (ASFA).

In FY24 alone, super funds paid out $1.7 billion in death benefits and $3 billion in permanent disability payments – providing vital support to Australians when it mattered most.

This powerfully demonstrates the role super funds play in protecting Australians – not just in retirement, but throughout life’s most challenging moments.

Still, there’s room to do more. Many members don’t realise what cover they have or how to tailor it to their needs. Default cover is a great starting point but it differs significantly between funds. Without engagement or advice, members are unlikely to tailor their cover and instead rely on default settings that may not suit their individual needs.

Regulatory changes introduced since 2019 – such as restrictions on default insurance for younger members or those with low balances or inactivity – were designed to protect retirement savings, but they’ve also led to gaps in coverage. ASFA estimates that 11,000 Australians are now missing out on $1.5 billion in disability benefits each year.

Super funds are working hard to close these gaps by helping members engage early and make informed choices about their insurance needs – so they don’t miss out on the protection they may need most.

Underinsurance has broader social implications, too. When individuals aren’t adequately protected, the burden shifts to families, communities and taxpayers. Increased reliance on government support places pressure on public systems that are designed to support vulnerable Australians.

In today’s cost-of-living crisis, the financial shock of losing a loved one can push families into immediate hardship. Without adequate death cover, many would struggle to meet basic expenses like rent, groceries and school fees – let alone plan for the future. Life insurance through super can provide a vital buffer, helping families maintain stability during one of the most difficult times in their lives.

While Australians are more likely to hold permanent disability cover, it’s income protection that often makes the biggest difference in the early stages of illness or injury. Without it, a temporary setback can quickly spiral into a permanent crisis. Early financial support can mean the difference between recovery and long-term disability.

Nearly half of Australians have three months or less in savings if they’re unable to work. Women are particularly vulnerable – 35 per cent couldn’t cover expenses beyond one month. Income protection provides a critical safety net, offering regular payments to help people stay afloat while they recover.

Many funds offer the ability to take up income protection and tailor the level of cover. Doing this through super allows people to balance current protection needs with saving for retirement – and importantly, it’s funded through super rather than as an out-of-pocket expense.

At Acenda, we’re proud to partner with super funds to help members understand and optimise their insurance cover. We’re passionate about improving outcomes and driving innovation that supports Australians through every stage of life.

Super funds play a vital role in building a more secure future for Australians – and the more the industry optimises the experience, the better the outcomes for members, their families, and the broader community as a whole.

So Australians can continue to take life on.