Mental health claims are becoming a superannuation cost problem
Mental-health-related TPD claims are surging, placing pressure on insurance premiums inside superannuation and creating a new tension with retirement adequacy.
APRA's quarterly life insurance statistics provide industry-wide financial results as well as performance information for individual life insurance product groups, including business written through superannuation.
That distinction matters because millions of Australians hold death, total and permanent disability (TPD) and, in some cases, income protection insurance through their super fund. The premiums are generally deducted from members' superannuation balances.
The latest figures therefore sit inside a much larger policy problem: the cost of disability insurance is increasingly colliding with the objective of building adequate retirement savings.
Mental health is now a major part of that story.
Industry data show mental-health conditions accounted for almost one in three TPD claims in 2024. Life insurers paid $2.42 billion for mental-health claims that year, including $1.68 billion through group insurance. Most strikingly, the rate of mental-health-related TPD claims among Australians in their 30s has increased 732% over the past decade.
The financial pressure is becoming evident in insurance pricing.
KPMG analysis of APRA data found claims for group lump-sum insurance — the category heavily exposed to TPD — increased from 78% of premium revenue in 2023 to 91% in 2025, before allowing for other insurance costs.
AustralianSuper provides a very tangible example. From 30 May 2026, around 1.7 million insured members faced higher insurance prices, including an average increase of about 40% for TPD cover, 20% for death cover and 38% for two-year income protection.
This creates a difficult public-policy trade-off.
Insurance through super provides an important financial safety net. But increasingly expensive insurance also means more money being deducted from workers' retirement savings.
APRA has warned that traditional TPD insurance was not designed for today's sharp increase in mental-health claims. The question is therefore becoming bigger than insurance pricing: is a large permanent lump-sum payment still the best way to support younger Australians experiencing long-term mental ill-health?
Sources: APRA, CALI, KPMG and AustralianSuper.
| Indicator | Result |
|---|---|
| TPD claims related to mental health, 2024 | Almost 1 in 3 |
| Mental health life insurance payments, 2024 | $2.42bn |
| Of which: group insurance | $1.68bn |
| Mental health TPD claims rate — people in their 30s | +732% in 10 years |
| Group lump-sum claims / premium ratio | 78% → 91% |
| AustralianSuper members with insurance affected | ~1.7m |
| AustralianSuper average TPD premium increase | ~40% |
| Death / 2-year income protection increases | ~20% / ~38% |