At the same time, super funds have successfully negotiated better value premiums making protecting Australian workers easier and more affordable than ever. In its media release announcing the research findings, the AIST said the increase in default levels means “in some instances there is a reasonable level of over-insurance among super fund members, notably among those aged under 32 years with no dependents”. The research showed that levels of over-insurance varied depending on the product type with many younger super members having more life insurance than needed, but far fewer having too much TPD insurance.

Insights such as these are helping funds and their insurance providers to better tailor the product structures to variable needs of members. We also know that despite the increase in default cover, those with large mortgages and dependent children remain vulnerable if the worst were to happen. This is why many super funds are looking at age-based or life stagebased increases in the default cover, giving members the opportunity to opt out if they wish. Looking at default levels of cover is not a simple process for super funds as they tend to have varying levels of segmentation data available. Moreover, the global financial crisis means the industry is now faced with the competing interests of increasing default cover at a time when the value of super funds has been eroded by poor investment performance.

But at the same time, the current economic climate has heightened public attention on financial security with a recent increase in take up of all forms of life insurance reported by a number of life insurers. In addition to improving the levels of cover and updating product structures, technological advancements are making it much easier for individuals to increase levels of cover within super. For those in good health, some insurers are able to process applications to increase cover immediately, requiring members to answer only a small number of straightforward questions.

Online applications, tele-underwriting, straight through processing and short form processing have all come a long way in reducing one of the major barriers for consumers: the application process. But th ere’s still wo rk to do While these developments are a big leap forward, there’s only so much that can be achieved by increasing and segmenting default levels. Everyone’s needs are different so there will always be groups that are not adequately protected, as well as those that are overinsured.