Super Consumers Australia has called for a review of group insurance to “close the gaps” in service.

The next government should also remove the withdrawal tax on insurance payouts in superannuation, SCA says in an election priorities list.

“We’re calling for a Productivity Commission review ... to root out the failures within insurance in super,” CEO Xavier O’Halloran said.

“Overwhelming evidence of claim handling failures has seen people struggling to pay the bills as they wait years to get paid the money they are owed.”

SCA says most Australians have one-size-fits-all life insurance bundled with their super as a default, and many people don’t know whether they have cover or if it will meet their needs.

The consumer advocate says premiums can be costly and super-held insurance in some cases overlaps with schemes such as workers’ compensation.

SCA says the claims process can be “slow and harrowing for people, leading to disputes, financial strain, and further trauma. And people face hefty taxes that reduce their claims payments, while life insurance outside super provides tax-free payouts.

“The government can make sure people get support when they need it most by removing the withdrawal tax on insurance payouts in super.”