Life insurers join forces with government to boost superannuation protections

The Australian life insurance sector has committed to collaborating with the federal government to introduce enhanced service standards for policies held through superannuation.

The move is aimed at improving outcomes for the millions of Australians who rely on insurance within their retirement savings accounts.

Protecting Australians’ financial security

The Council of Australian Life Insurers (CALI) confirmed it will contribute to the development of these standards, following a government announcement designed to strengthen the support available to superannuation members.

CALI CEO Christine Cupitt (pictured) highlighted the important role life insurance plays in protecting Australians’ financial security, particularly for those whose coverage is tied to their superannuation.

“Life insurance works hand in hand with super to protect people’s nest eggs and allow them to have a dignified and financially secure retirement if they can’t live a full working life,” she said.

She noted that life insurance provided through superannuation is the only form of cover for many individuals, so it is understandable to expect claims to be processed accurately and efficiently.

Current claims processing standards 

Australia’s life insurers currently follow the claims processing timeframes set out in the Life Insurance Code of Practice. These standards include:

• income-related claims (such as income protection), where decisions must be made within two months of receiving the claim or the conclusion of any applicable waiting period
• lump-sum claims (such as total and permanent disability or death cover), where decisions are required within six months of receiving the claim or the end of the waiting period specified in the policy

Industry data indicated that most claims are resolved within these timeframes. This reflects ongoing investments in operational improvements, as well as transparency tools like Moneysmart claims comparison platform.

Addressing gaps in financial advice 

In addition to improving claims handling, CALI raised concerns about limited access to financial advice for life insurance products.

Speaking to the Senate Economics Legislation Committee last year, Cupitt described a growing advice gap that leaves many Australians struggling to make informed financial decisions.

Research commissioned by CALI found that 70% of Australians are worried about how rising living costs affect their ability to afford or maintain life insurance.

Cupitt explained that people know they need to manage their finances effectively, and getting advice on life insurance is a key part of that. However, professional advice can cost more than $3,000, putting it out of reach for many households.

She stressed the need for more accessible and affordable advice to ensure Australians can make confident financial decisions.