SMSF members who deliberately hold an APRA-regulated fund for life insurance are at risk of losing this benefit if they fail to act before legislation comes into play in July.
From 1 July, 2019 the Government’s ‘Protecting Your Superannuation’ laws would remove automatic life insurance cover from members with an account that was inactive for 16 months or more.
This would apply unless the member gave direction to the fund that they wanted to opt in or made a contribution or rollover into their inactive fund in order to reactivate it.
Funds had until 1 May to inform clients they may lose their life insurance cover unless they took action.
Chief executive of the SMSF Association, John Maroney, said: “We are worried that some SMSF members will lose their life insurance cover because they have not checked correspondence from their APRA fund or contributed to it.
“This could have a devastating impact on policy holders or their beneficiaries if their insurance cover is unknowingly terminated. Furthermore, it may be extremely difficult and costly to try and access insurance at a later stage.”
Earlier this week, AIA Australia, Commonwealth Superannuation Corporation and Mercer launched a ‘click, check and protect’ campaign to remind individuals to review their personal insurance circumstances ahead of the legislation.