SMSFs urged to get advice on insurance
Self-managed superannuation fund (SMSF) trustees would be well advised to seek professional help in dealing with the growing regulatory burden confronting them, according to Centric Wealth technical specialist Natasha Panagis.
Specifically referencing the recently imposed requirement for SMSF trustees and directors to consider providing insurance to their members, Panagis said this was likely to prove difficult.
"We think it would be very difficult for most Australians to understand the full scope of their insurance requirements without some sort of formal training," she said.
Panagis pointed out that while the change with respect to insurance within SMSFs was mandatory, it was up to the trustees to determine the type and level of insurance cover they should offer to members, whether inside or outside the SMSFs.
As well, she warned that a recent upturn in SMSFs accessing loans to buy investment properties could accentuate the need for appropriate insurance.
"Where trustees have borrowed money to buy property, not having life and total permanent disability (TPD) cover can become a major problem if one of the members passes away unexpectedly or becomes disabled and can no longer contribute into super," Panagis said.
She said the key risk in such circumstances was that the SMSF would go into negative cash flow, which could be exacerbated if existing debt arrangements were in place.
Recommended for you
With just 30 per cent of Australians knowing their superannuation balance to the nearest $1,000, Findex has emphasised the role of financial advice in addressing the critical super knowledge gap.
Underestimating the cost of insurance by almost $75,000 in a Statement of Advice is among multiple reasons that a relevant provider has faced action from the FSCP.
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.