One in four Australians in the dark about their superannuation insurance cover, survey finds
Lyndal Jordon was diagnosed with cancer and says her superannuation fund and its insurer have exacerbated the financial and emotional turmoil. (ABC News: Darryl Torpy)
Lyndal Jordon worked in corporate roles for decades and thought she had set herself up for a comfortable retirement.
But in 2022, she was diagnosed with gastric cancer.
She doesn't know how long she has left to live and says her superannuation fund, Aware Super, and its insurer, TAL Insurance, have exacerbated the financial and emotional stress.
"Your life changes completely when you receive a terminal illness diagnosis," Ms Jordon tells ABC News.
"You believe in the systems and processes that you've set up, and then you get this slap in the face."
After getting lower income protection and terminal illness payments than she thought she was entitled to, Ms Jordon made a formal complaint with her super fund about her insurance cover being at a lower "default" level, rather than more expensive coverage that would have resulted in a higher payout.
"I was in the thick of [cancer] treatment when I received the investigator's response to my complaint," she said.
"Sickness takes over capacity — capacity to even live a normal life, let alone fight a David and Goliath fight.
"I don't know, but to me, it felt like it was almost like, 'if we make it hard enough, they won't try, they won't push'. And physically at the time [of cancer treatment], I couldn't."
Despite Australians paying $6.8 billion for insurance within their superannuation funds in 2023-24, new research by Super Consumers Australia, shared exclusively with ABC News, shows that one in four don't know what insurance they have in super.
Ms Jordon says she contributed to her super fund for more than 11 years, but feels she's been left in the dark and treated poorly.
She says the insurance payouts are well below the amount needed to replace her former income, forcing her to drain her savings to get by.
"Whilst I have savings, and I have some means, it's been really difficult, very difficult."
Aware Super, which has $180 billion in funds under management, has apologised for the difficulty Ms Jordon has faced in the processing of her claim, but argues she was paid correctly under the default level of insurance cover she had been paying for.
"We offer our heartfelt apology to Ms Jordon for the difficulty she has had in finalising her insurance claims,"an Aware Super spokeswoman said.
"We understand how challenging it can be to work through financial matters at such a stressful time.
"We acknowledge that when people are suffering a serious illness, any wait to finalise a claim can be distressing.
"We are focused on paying insurance claims quickly and keeping members informed throughout the claim's progress."
Lyndal Jordon and husband Glenn Allan in happier times. (Supplied)
'Default' insurance leaves member without adequate coverage
Like many others, Ms Jordon was not closely checking the premiums contained in her annual statement, which she says are confusing to understand anyway.
She says she first applied for a lump sum payment and income protection with Aware Super in May 2023, but she did not start receiving income protection payments until about six months later.
Loading...Aware Super says Ms Jordon was paid out her super balance within six business days of making her claim, while her lump sum payout was made within a few months.
Aware Super spokeswoman says to make sure the policy requirements are met, insurers used by super funds need to obtain relevant documentation, such as medical information from treating physicians and payment details, which can take some time.
However, Ms Jordon's biggest concern was the size of her insurance payouts.
She says when she received a $55,000 lump sum payment and $1,000 monthly income protection payment, she realised the payouts were "extraordinarily short of where I had presumed it would be".
She had thought she was protected by a policy offering up to $5,000 a month in income protection insurance — "which still would have been a portion of what my monthly income was when I was working" — and a lump sum payment running into hundreds of thousands of dollars.
"[I was] absolutely blindsided, and when I explained that I wasn't aware [the insurance was set to default], they said, 'it's up to you to request to step up in your insurance policy if you're not happy to stay on a default payment,'"Ms Jordon said.
Ms Jordon also says she was not clearly advised by Aware Super that she was on a limited "default" level of coverage.
She says she did not notice that she was not paying higher insurance premiums because "it's absorbed into the information around your superannuation policy".
"Our member's level of insurance cover did not change from the time the policy was taken out," Aware Super said.
Lyndal Jordon claims she never received paperwork from Aware Super advising her she was being moved into a default level of coverage after the merger. (ABC News: Darryl Torpy)
"We encourage our members in multiple ways to check their level of cover is right for their circumstances, including in their annual statement, and when they log into our member portal or app.
"There is always room to do better in how we handle insurance claims, and we are focused on continuously improving our service."
Australians pay for super insurance they don't know about or don't understand
Ms Jordon is not alone in being confused about the level of insurance coverage contained in her superannuation fund.
Super Consumers Australia's Pulse survey is based on the responses of 1,526 respondents aged between 18 and 75 years old, gathered last May.
It found that default insurance cover in super has left many Australians paying for insurance they don't know about or don't understand.
More than a quarter of people are either unsure if they have insurance (19 per cent) or don't know what their policies are (9 per cent), the survey found.
Over half of 25- to 29-year-olds don't know that default insurance normally starts at age 25, even though they have recently passed this age threshold.
Super Consumers' Australia survey asked the question: "If you are over 25 years old, super funds will normally automatically enrol you to their default insurance." Most said they did not know. (Supplied)
Super Consumers Australia chief executive Xavier O'Halloran is calling for a Productivity Commission review of insurance in super, to ensure it is living up to the needs of Australians.
"It's often only at claim time that people realise that they don't have a policy that protects them," he says.
"That can obviously lead to delays where there's a mismatch between what people think they've been paying for — for years and years — and what they end up getting."
Super Consumers Australia CEO Xavier O'Halloran is calling for a review of insurance in superannuation. (ABC News: Daniel Irvine)
He says the problem is particularly acute "when there's been mergers and people's benefits have changed or, in some cases, insurers and super funds have started charging people for insurance that they've opted out of previously".
"And so they end up racking up big bills without realising," he said.
"The super funds have actually been quite lax at keeping all the information and data on people together when they're merging, and that's obviously leading to some really tragic outcomes for people."
Corporate watchdog ASIC puts super funds on notice
Corporate watchdog ASIC has put super funds on notice, after launching legal action against industry giants including Australian Super and Cbus, for their handling of death and disability claims.
Australian Super has been accused of failing to process thousands of death benefit claims "efficiently, honestly and fairly" between July 2019 and October 2024.
And Cbus is being sued for delays in processing more than 10,000 death and disability payments.
Assistant Treasurer Stephen Jones has asked superannuation funds to lift their game when it comes to customer service, and there have also been separate calls from a Coalition-headed Senate inquiry for an overhaul of Australia's $4 trillion super industry amid "conflicts of interest".
Mr O'Halloran says ASIC's court action and an increase in consumer complaints to the Australian Financial Complaints Authority (AFCA) show how widespread the problem is.
"They've all had issues dealing with really long claims handling processes, and it's why the government has actually stepped in and said, 'we need a customer service standard to deal with this problem'," Mr O'Halloran said.
"Super funds are taking far too long to look after people at sometimes the most vulnerable points in their lives."
Mr O'Halloran also wants to see the government enshrine in law what communications practices and time-frames for responses to claims are required from superannuation funds.
"At the moment, there is next to no obligations — outside of some very high-level principles — to protect consumers.
"What we want to see in these customer service standards are actual timeframes, so that the super funds have to deal with these problems in a prompt way, and that accounts for the kind of stress that the individual is under."
Calls for greater transparency from super funds
Ms Jordon has called for better transparency and support from super funds, particularly during critical illness.
Lyndal Jordon and Glenn Allan have eroded their savings amid Lyndal's battle with terminal cancer and her super fund. (ABC News: Darryl Torpy)
"They need to tighten their communication and advise people of what they can expect," she said.
"To be ensuring that your members are receiving those annual statements and that the documented information around the insurance coverage is very clear."
Ms Jordon says she faced numerous obstacles, including inconsistent communication.
"It was constant emails [to the super fund and insurer]," she explains.
"I wouldn't receive calls back, or I would receive a call from somebody who I didn't know, and I would have to go through it with them again, and it was like Groundhog Day every time."
She says the fight has left her feeling defeated.
"It's been really damaging — it makes you not trust the process, or the people talking to you about it," she says.
"I think for whatever time I have left, I want to spend it enjoying life, rather than following up phone calls and following up emails."
Editor's note: This story was altered on March 27, 2025, several hours after publication, to remove references to Ms Jordon's level of insurance cover changing as a result of a merger with another fund. Aware Super says Ms Jordon's insurance cover remained at the same default level throughout her membership and was unaffected by the merger. It also adds further comments from Aware Super disputing Ms Jordon's recollections of the timing payments were made to her.