10 Oct Unawareness Slows Insurance within SMSF
AIA Australia said a poll result showed slow adoption of life insurance within self-managed super fund. The survey of over 400 financial advisers that included accountants, brokers and advisers said SMSF trustees’ “knowledge gap on life insurance” was the reason.
About 45% of respondents said less number of clients had life insurance within SMSF and the reasons could be:
– There is not enough awareness about life insurance within SMSF. The “knowledge gap” caused less life insurance coverage adoption within super funds.
– It may mean that SMSFs may not be availing of full tax benefits using pre-tax dollars to fund life insurance within SMSF.
– About 66% of espondents cited the existence of other coverage outside SMSF as the reason while 12% said it was due to lack of access and 7% reported inability to fund coverage.
AIA Australia’s Life Insurance General Manager Damian Mu said advisers should serve clients better by educating them about the benefits of cover within SMSF. He also quipped that:
- Advisers should look at Super Industry Supervision Act revisions that require “insurance in a fund’s investment” as strategies to help “reinforce the importance” of having coverage.
- The growing SMSF market could help “reduce the gap” by educating trustees after stating that the situation is comparable to Australia’s underinsurance issues.
Still, the survey revealed higher chances of coverage within SMSFs as 82% of respondents believe that the number of clients who will have life insurance added into their funds will rise within a year.
To improve the situation, Mu said advisers and AIA Australia together with AGI produced Self-Managed Superfund Master Insurance Plan. It offers up to 20% savings and may be accessed online.