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Is your life insurance at risk due to recent super reforms?

Posted on May 30, 2019

Is your life insurance at risk due to recent super reforms?

If you are superannuation account holders with inactive accounts with insurance cover in your superannuation fund, you may be affected by the recent law changes which will take effect on 1 July 2019.

The recent changes to super include:

·     Removal of insurance cover on accounts which have been inactive for 16 months or more, regardless of balance. Members must instruct the Trustee to keep their insurance cover. An account is inactive if a contribution or rollover has not been received for a continuous 16 month period.

·     Accounts inactive for 16 months with a balance of less than $6,000 will be transferred to the Australian Taxation Office (ATO) in October.

·     The ATO will now be required to consolidate transferred monies into an active account, if possible, within 28 days.

·      A 3% cap on fees for account balances of less than $6,000 and a ban on exit fees

What does this mean?

If requirements are met, these reforms can lead to the cancellation of life insurance held in super.

What do you need to do?

Your super fund may have contacted you, advising that you will need to opt-in to keep your insurance cover, as they may not have received a contribution into the fund in the last 16 months.

If you wish to continue holding your insurance policy inside super, you can complete the form and send it back to your super fund.

If you haven’t received a communication, you may have met the requirements or do not need to opt-in, as your account has received a contribution over the last 16 months.

If you are concerned that you might have missed a communication, or have not updated your address details, please contact your super fund.

This is a general information only. You should contact your financial adviser to discuss how the new changes will apply to you and receive advice based on your personal objectives, financial situation or needs.

Insights
Hall Consulting Group