A joint report by The Australian Institute of Superannuation Trustees (AIST) and Industry Funds Forum (IFF) indicates that superannuation funds may need to step up their campaigns to increase members' knowledge of superannuation-based insurance.

About a third of those surveyed are not aware that their super fund includes insurance, and around half have trouble understanding how insurance works.

Based on a survey conducted by Sweeny Research of more than 2000 members of nine large industry super funds, the report is believed to be the first Australian research project to compare 'actual' levels of insurance cover with an individual's 'perceived' level of cover, and alongside the level of insurance cover required for their personal circumstances.

More than 50 per cent of respondents were under-insured for death cover by at least $100,000, the survey found. 

Nearly three-quarters are underinsured for total and permanent disability (TPD) cover by more than $100,000.

"There is clearly a limited knowledge of how super fund-based insurance really works," Sweeney Research executive chairman David Barmer said.

Barmer said that any marketing campaigns to improve knowledge of insurance need to be tailored to the different segments in the community.

Few respondents were aware of the tax benefits of buying insurance through super, however good news from the survey was that super funds come up trumps in terms of who respondents trust to get advice on insurance.