We often remember to insure our most favoured possessions, including our homes, contents and cars, however, our most valuable asset, ourselves and our families’ livelihood are often forgotten1. Some of us also hold our insurance as part of our superannuation.
Insurance cover through super may be cheaper than cover outside of super depending on your circumstances and has no impact on your day to day cash flow as insurance fees are deducted from your super account.
Recently the Australian Government introduced new laws called Protecting Your Superannuation Package that affect the insurance arrangements you have through your superannuation product. The new laws prevent super funds from continuing to provide insurance cover to its members’ if superannuation contributions have not been received into the account for a continuous period of 16 months. This means that your insurance could be cancelled as early as 1 July 2019, unless you state in writing that you want the insurance retained.
So what action do you need to take?
If you have not made a contribution or rollover for a while, contact your superannuation provider to confirm:
Option 1: Tell your Super provider you want to keep the insurance
- Advise your Super provider that you wish for your insurance to continue being held as part of your superannuation policy;
Option 2: Make a Super contribution
- If you contribute or rollover additional funds into your Super account prior to the cancellation date, your insurance cover will automatically continue.
Additional rules for inactive low-balance accounts
Also, additional rules have come into effect with inactive low-balance accounts. In the event your insurance is cancelled, and your account balance falls below $6,000 under the new laws your account may be classified as an inactive low-balance account and will be transferred to the Australian Taxation Office.
You can authorize your superannuation provider to exclude your account from future transfers of inactive low balance accounts to the ATO.
According to Lifewise, “83% of Australians say they have insurance for their car, yet only 31% insure their income?”
Now may be a good time to re-evaluation your insurance needs. Please contact us to organize an appointment.
Varria Pty Ltd (ABN 23 108 047 383), trading as Varria, is an authorised representative and credit representative of Charter Financial Planning Limited , Australian Financial Services Licensee and Australian Credit Licensee (AFSL 234665).
Important note: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.