You may have recently received a letter from your super fund or heard on the news that your insurance may be cancelled. This is a result of new Federal legislation passed earlier this year. The objective of this legislation is to ensure that people are not paying for insurance that they do not need. The assumption is that people who are no longer contributing to a super fund, most likely also no longer need the insurance available through these funds.
This is not universally the case and you therefore will need to take action if you wish to retain your insurance. Where someone has good insurance coverage that cannot be replaced or their health has deteriorated, then it has been a common strategy to recommend holding onto the insurance in a super fund, even if that fund is no longer being used for ongoing contributions.
Amongst other measures, this legislation requires that superannuation accounts that have not received a contribution or a roll-over for 16 months must be cancelled. This legislation starts from 1 July 2019 and any inactive period prior to 1 July 2019 will be included in the calculation of the 16 month period. Thus, some clients may have their insurance cancelled immediately from 1 July 2019. You will have the opportunity to elect to retain your insurance, by completing the election form and returning it promptly to your super fund.
If this applies to you then please treat it as urgent. I encourage you to call our office to discuss your ongoing insurance needs or to arrange an appointment.
It is particularly important, where your contact details change, that you advise the super fund or at least let our office know. If the super fund does not have your current contact details, then you will not receive the notification letters and your insurance will ultimately be cancelled without your knowledge.
Please do not hesitate to contact our office on if you have any questions or concerns.
This article is general in nature. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your particular investment objectives, financial situation and individual needs. Principal Wealth Management Pty Ltd trading as BMO Financial Solutions ABN 53 109 336 601 is a Corporate Authorised Representative of McPherson & Associates Pty Ltd Australian Financial Services Licence (AFSL) 229883. McPherson & Associates Pty Ltd and its Authorised Representatives do not accept any liability for any errors or omissions of information supplied in this article.