Broker Marsh has urged employers to reduce their reliance on insurance within superannuation and ensure all their workers are covered by life and total and permanent disability (TPD) benefits.

Because employers cannot guarantee all employees will remain with their default fund, it erodes the employer’s value from the benefit, leaving a gap in cover for part of their workforce, according to a Marsh paper on benefit trends.

About 67% of employers provide life and TPD benefits through super due to the model’s tax effectiveness.

Marsh says employees need to break the connection between retirement savings and life and TPD.

Uncertainty around whether employees will remain with default super funds is jeopardising the financial support employers provide in cases of death or medical issues, it says.