Peter Brown has had his super drained by insurance premiums despite not even knowing he had been signed up for death, disability and income protection cover.

Peter, 48, is semi-retired and does some part time work at Coles a couple of nights a week to earn what he calls some "pocket money".

Not quite the career move he felt warranted income, disability or death insurance cover through his superannuation.

Peter Brown had his super drained by insurance premiums despite not knowing he'd been signed up for a particular cover. (9news)

Peter says he never realised he was paying the $26.75 a week premium until a letter arrived in the mail informing him REST Super had cancelled the extra insurance cover because he no longer had enough money in his super account.

Of $800 in superannuation Coles had paid Peter over the past six months, $800 had been taken out by REST super.

"If there was enough money in my super, I still would not know about this, which is a scary thing," Peter told A Current Affair.

Peter was signed up for death, disability and income protection cover. (9news)

Peter said while the company might be "legally" allowed to charge the extra insurance cost, he believes it is "morally" wrong.

These life insurance policies are structured on an "opt out" basis, which means the premium is automatically deducted until the member states otherwise.

Using REST Super as an example, a 25-year-old woman would be charged $252.20 for the default cover.

REST Super drained $800 from Peter's super account. (9news)

For a 35-year-old man, the price jumps to $1067.04, and for a 55-year-old woman, $1201.20 is deducted from her super fund every year.

Minister for Revenue and Financial Services, Kelly O'Dwyer, says from July next year, super companies will no long be able to charge default insurance policies if you're under 25 years old, your account balance is below $6000, or a contribution hasn't been made to your super fund for 13 months.

“It's a national scandal in our superannuation system right now that people can be defaulted into insurance premiums that they either do not want or do not need and it can erode their balance to zero," Ms O'Dwyer said.

"We know that there are around five million Australians who are potentially in the same position.

Financial Services Minister Kelly O'Dwyer says changes are coming to super practices. (9news)

“We know that superannuation is your money and it should be protected for you, after all it's your hard earned income that's been set aside for your retirement savings and we are saying 'no more'. This scandal must end and changes must be made.”

Finance expert Scott Haywood says while the crackdown is a step in the right direction, there’s no substitute for due diligence.

“When you start a job if you do not nominate your superannuation fund you'll go into what's known as a default plan. The default plan has to have minimum death and TPD (Total Permanent Disability) insurance no matter what age you are and the member or employee has to pay for it,” Scott said.

“Engage in your superannuation. If you don't want insurance, opt out or get your own superannuation fund and take ownership of superannuation in your life.”

In a statement, REST Super said when a member joined the fund, they are advised of their insurance cover as part of a welcome letter and then two weeks later are sent a separate communication to remind them of the insurance the company provided.

Thankfully Peter managed to get his $800 put back into his account.