Changes are set to take place from 1st July
With the Government’s changes to superannuation, many Australians only have until the 1st of July to ensure that their current insurances remain active and intact!
Whether it is life insurance, total permanent disability insurance, or other types (depending on your fund), it is vital to understand the important changes that will occur on 1st July, so we have asked an expert to explain it further. If you think you might have a claim against your insurance, contact our office for a free review.
The following has been prepared by Financial Advice Matters
Financial Advice Matters‘ Advice Development Manager, Francis Rigby, states that:
“Many people are not aware of changes to superannuation that are taking place from 1st July 2019 and the benefits they may lose if they don’t take action. We have received numerous enquiries from those who have received letters from their fund providers. We are also aware that some product providers are struggling with the time frames to inform members of the changes that are happening.”
The main changes are outlined below.
Cancellation of insurance
Super funds will cancel insurance on accounts that haven’t received contributions for at least 16 months. Your fund will contact you if your insurance is about to end. If you want to keep the insurance through your super, you must tell your super fund or make a contribution to that account. You may want to keep your insurance if you don’t have any other insurance through another fund or insurer and you have a particular need for it (e.g. you have children or other dependents, or you work in a high-risk job). Many Australians are unaware of the in-built insurance component of their superannuation, and in the event of permanent disability or death, this component of your superannuation could be very valuable to you or your loved ones.
No exit fees
There are no exit fees if you leave your super fund.
Fee limit on low-balance accounts
Annual administration and investment fees can’t exceed 3% of the balance of accounts with less than $6,000. Your account balance is calculated at the end of the fund year.
Inactive account transfers to ATO
Accounts with less than $6,000 that are inactive for 16 months will be transferred to the ATO. The ATO will merge it with your other active super account. If you don’t have another active account, the ATO will keep your super safe.
What do you need to do?
In order to retain your current in-built insurance cover, a number of options exist. You can:
- Make a contribution to your superannuation fund;
- Arrange for other super benefits to be rolled over to the account so that your total super held is a minimum of $6,000. You would need to arrange this as soon as possible, and make sure that no superfund held by you has been dormant without payments for 16-months;
- Write to the super fund informing them that you require your current insurance cover to be retained;
- If you have received correspondence from your super fund, you can make an election in the form provided by your super fund to confirm that you wish to retain your insurance cover.
If you have received a letter from your super fund informing you that your account has not received contributions or rollovers within the past six months, there is a risk that your insurance may be cancelled as early as 1st July 2019.
You will need to immediately review your superannuation insurance cover to determine if you still need the cover. It is critical not to ignore these changes, as currently, you need to opt-in to keep your current level of cover. If your current insurance cover is cancelled, it may be difficult to replace the cover where it is needed.
We recommend contacting your accountant or financial advisors immediately to arrange a formal review of your insurance. We are also able to assist you in ensuring you have the right insurances.
You can view a full fact sheet from Financial Advice Matters here.
If you think you might have a claim against your insurance, contact our office for a free review.
The information contained in this brochure is of general nature and does not take into account any personal circumstances.
Whilst all care is taken in the preparation of this material, Alliance Wealth Pty Ltd, its group of companies and employees (together, Alliance Wealth) do not give any guarantees, undertakings or warranties concerning the accuracy or completeness of the information provided.
The information contained in this material should not be relied upon as a substitute for professional financial advice (including tax advice) and you are advised to consider obtaining professional advice if the information is of sufficient importance to you. Alliance Wealth accepts no liability of any kind to any person who relies on the information contained in the material
Please note this article was not prepared by Brandon & Gullo Lawyers and Brandon & Gullo Lawyers does not warrant the accuracy of the contents of this article. If you have questions, please contact Financial Advice Matters
This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.