Don’t fall for these common myths about life insurance

Published November 2025 | 5 min read
Expert contributor: Eoin Reville, General Manager, HCF Life
Words by Angela Tufvesson

There are almost as many theories about life insurance as there are policies to choose from. We debunk common myths and explore the benefits of life insurance. 

What are some of the common reasons people go without life insurance or don’t have enough? They range from assuming you’re covered through your super, to thinking you’re too young to need it or you’ll need to undergo intrusive medical tests to qualify.

But here’s the thing: these assumptions are most often myths. “There are a lot of misconceptions about life insurance, and a level of underinsurance has emerged in recent years in Australia,” explains Eoin Reville, General Manager at HCF Life.

In 2022, 85,000 Australians or their loved ones received $11.2 billion in life insurance benefits. Despite this, research shows that, on average, just a third of Australians have life insurance, and they’re almost three times more likely to cut life insurance from their budget than cover for their car or home.

Discover common myths about life insurance in Australia and how to make sure you and your loved ones are protected.

Myth: Most life insurers don’t pay out

Eoin says the life insurance industry pays out around 85 to 90% of all claims for life insurance. “HCF Life pays, on average, 86% of the claims that are lodged with us. When they’re not paid, it’s for something outside of the policy coverage, and we’re working to improve this outcome,” he explains. “If someone lodges a claim with the correct supporting information, we’ll normally pay it in less than two weeks.”

HCF has been supporting members with life insurance for 44 years. In FY2024–25, we paid $13.7 million in claims to members, with over 2,400 claims paid to HCF Life policyholders.

Myth: Super fund life insurance is enough

Most superannuation funds automatically offer life insurance, total and permanent disability insurance, and income protection insurance when you sign up. But Eoin says the level of cover isn’t always enough to cover household expenses if something unexpected happens.

“You might, for example, have a large mortgage and the amount of coverage you have through superannuation may be nowhere near enough to cover that,” he says. Based on the latest figures from APRA, the average level of death cover for group super in Australia is currently $226,000.

Insurance through your super fund also may not cover unexpected costs arising after serious illnesses like a heart attack or stroke, or costs that come with recovery. Just 30% of the Australian workforce has income protection through their super.

“If you have an accident or illness and can’t work, do you have the level of coverage you need to support your family and manage your affairs? The default level of cover typically won’t reach the level of cover many people need,” Eoin says.

You may also not be covered under your super fund life insurance if you have a low super balance (under $6,000), your account is inactive or you’re over 65. Your cover can also change if you start a new job.

While there are advantages to getting life insurance through your super, it’s important to do your research before deciding what cover is right for you.

Myth: Life insurance is just for when you pass away

HC’s Life Protect Insurance pays up to $1.5 million if you pass away or if you’re diagnosed with a terminal illness^*, depending on your age and level of cover^{^}. But most of HCF Life’s products are designed to support recovery from accident, illness or injury.

Recover Cover⁺ is a collection of life and recovery products designed to help with the unexpected costs that come with getting back on your feet after illness or injury, including Income Protect Insurance, Personal Accident Insurance, Cash Back Cover, Critical Illness and Kids’ Accident Cover.

Eoin says HCF offers a unique range of products to complement your health insurance. “If you have a heart attack, cancer, stroke or other trauma or serious health event, a benefit amount can help you get back on your feet and manage that period of time where you may be unable to work or cover the medical expenses that come with your illness.”

Myth: You don’t need life insurance if you have private health cover

While private health cover can help with medical expenses, sometimes the costs don’t stop when you leave hospital. That’s where Recover Cover comes in, giving you quick cash to use for any purpose, like taxis to the doctor, extra rehab, hospital parking, babysitters or help if you need time off work. The Recover Cover range is designed to support and complement private health insurance.

Myth: Unless you’re a senior, life insurance isn’t necessary

Even if you’re young and healthy, it’s always better to be prepared, not just for unexpected death but also illness or loss of income.

Life insurance is especially important when you’re in your peak income-earning years and you have kids, a mortgage and higher daily expenses, explains Eoin.

“If you have an accident or injury and you’re starting a family or have a mortgage, it’s a significant issue for you if the worst happens. As you get older, you might have more of your mortgage paid off and not as many financial outgoings,” he says, explaining that most people take out life insurance and income protection in their 30s and 40s.

Eoin adds it’s important to review your life insurance policy if your circumstances have changed, like buying a new home, changing jobs or having a baby.

Myth: You only need life insurance if you have dependents

Life insurance doesn’t just help loved ones. If you become ill, injured or lose your job, it can help ease the financial strain of bills, everyday expenses and recovery costs. HCF’s Income Protect Insurance helps to cover living expenses, while Critical Illness Cover and Cash Back Cover pay a cash benefit to help ease the unexpected financial strain of serious illness.

“If you have a life-changing event and you’re going to have ongoing medical costs and an inability to work at the same capacity you had pre-event, you're going to need financial protection through savings, family and friends, government support or insurance cover,” Eoin explains.

Myth: You have to take lots of medical tests to get covered

You can take out life insurance without medical tests. You won’t need to undergo any complex medical checks to take out a Recover Cover policy. For Life Protect Insurance, we’ll ask some basic health and lifestyle questions like your age, weight, whether you smoke and a range of questions about your medical history. For other products, like Personal Accident Insurance, there are some simple eligibility questions to answer.

Eoin explains that if you have a pre-existing condition, you may not be able to be covered for that particular event. “However, for anything that occurs after the policy purchase, you will be covered.”

Myth: Life insurers have a bad reputation

At HCF, we believe your health shouldn’t be for profit. We’re focused on providing great value health and life insurance, not profits for shareholders.

We were named the ‘Most Trusted’ direct life insurance brand in the 2024 Finder Customer Satisfaction Awards.

We're also proud to have been awarded:

• WeMoney’s Best for Income Protection Insurance (Direct), 4 years running (2022 to 2025), Outstanding Customer Service – Income Protection, 2 years running (2024 to 2025) and Outstanding Customer Service – Life Insurance (2025)
• Money Magazine’s Best Value Direct Income Protection Insurance, 2 years running (2024 to 2025)
• Mozo’s Experts Choice Award for Exceptional Value Income Protection, 4 years running (2022 to 2025)
• Plan for Life Excellence Awards – Direct Life Insurance for 6 years in a row.

Our HCF Healthful app is also available to all HCF Life policyholders and was recently awarded best Health and Wellbeing app in Life Insurance in Australia by Financial Standard.

Make sure you’re covered

Having no, or not enough, life insurance can leave you and your family financially vulnerable if something unexpected happens. Choosing the right life insurance policy tailored to your needs can give you peace of mind that you’ll have protection when it matters most.

Protect what matters with HCF Recover Cover

Recover Cover⁺ is our innovative range of life, income protection, critical illness and accident products that help with the unexpected costs that come with sickness, injury or death. The range includes fast, easy and flexible cover that provides cash payments^{^} after sickness and injury or support for your family after you pass away. In the last financial year alone, we paid out $13.7 million in claims, with an average turnaround of less than two weeks.