Income protection cover has been labelled poor value and the “chief culprit” in superannuation members being unable to make claims.

“Many young people are paying for insurance they simply don’t need,” Productivity Commission Deputy Chairman Karen Chester said.

“And many end up with ‘zombie’ policies they can’t even claim on. Income protection is the chief culprit here.”

Having multiple insurance policies on inactive accounts exacerbates balance erosion, the commission’s recent draft report on the $2.6 trillion super system says.

The report flags income protection as a problem area. Members who are not working cannot claim because they do not have an income to offset.

And having multiple income protection covers restricts claims, because payments from one policy reduce eligibility to claim against another, and total payments cannot exceed a set proportion of pre-existing income.