More insurance options within SMSFs
On the back of a recent survey of 400 financial advisers on the knowledge and take-up of life insurance within self-managed super funds (SMSFs), AIA Australia has made it clear that trustees now have a number of insurance options at their disposal.
Yet the reality according to Damian Mu, general manager of life insurance for AIA Australia, is that insurance take-up within SMSFs remains lacklustre.
"With 456,000 funds and $418 billion worth of assets across approximately 867,000 members, SMSF market growth remains strong," he said.
"However, what we found when conducting this survey is that there is a significant gap with respect to people having insurance within their SMSFs.
"So to address that gap, AIA Australia has worked with Australian Group Insurances to produce an SMSF master plan," Mu said.
Dubbed the Self Managed Super Fund Master Insurance Plan, Mu said that the product would offer trustees life insurance at wholesale rates, treating SMSF members more like the members of industry and retail funds with multiple members and multiple employers.
"So what an SMSF brand does is give trustees a way of having their insurance inside super, as well as certain components outside super, depending on the need of the SMSF members themselves," he said.
"But we've managed to give them ways with which they can get wholesale group insurance rates that can see those members saving up to 25 per cent or more on your standard death, TPD (total permanent disablement) and income protection cover."
Mu said that AIA Australia was strongly of the view that Australian superannuation funds, whether industry, retail or SMSF, were key to addressing an acknowledged underinsurance gap.
"Clearly, SMSF growth is something you cannot ignore," he said.
"They are a large segment of the super industry and, to date, there has been that gap in the market.
"So we've already seen some good early success in terms of take-up but by simply having an insurance solution there that does fill that gap, our hope is that life insurance will be a benefit people will be far more willing to take up," Mu said.
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