Knock-on impact of Government changes to super
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The Federal Government’s decision to reduce concessional superannuation contributions has prompted many Australians to cancel their life insurance cover through super, according to Asteron general manager Jordan Hawke.
He said through the lowering of concessional contributions to $50,000 for those over 50 and $25,000 for those under 50 years of age, Australians were forced to choose between funding their life cover through super, or maximising their contributions.
“In many cases, this means life insurance is being cancelled,” Hawke said.
In some instances, clients might be at risk of breaching the contribution limits and would therefore be required to pay additional tax, while others might not have sufficient super balances to retire on.
In response to this, many advisers are considering moving their clients’ insurance outside of super. However, this might present an issue due to insurers’ underwriting requirements.
“Many insurers require customers to be underwritten again, at an age where that may have a detrimental impact on the cost of insurance cover, but at an age where they need cover the most,” Hawke said.
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