While we are running through the election campaign for 2019 there is a major life admin task afoot!
If you have insurances in place linked to your superannuation account you will be getting a letter or email to make sure you are aware of how this is structured.
Insurances are a part of you having the right back up plan and outsourcing certain risk to an insurance company. This for most people in accumulation phase or with a young family is a key part of your overall financial decision making framework. Funding this via superannuation is a good way to get tax benefit on the policy.
If you haven’t reviewed your insurance needs recently then give us a call or send an email so we can assist in that process. You don’t want to be paying for cover you no longer need.
Protecting Your Super package
The Federal Government introduced the Protecting Your Super package. Designed to ensure that members of Super funds are not paying for insurance cover that they do not know about or premiums that reduce your retirement savings.
This legislation has an “Opt-In” requirement, for people who want to retain cover.
Put simply this “package” is for any Super account, with insurance in it. If the account has been inactive for a continuous period of 16 months, it will have that insurance cancelled automatically. Unless the member (you) informs the Super fund that you want to keep the cover in place.
You’ll then need to notify them every 12 months to do the same thing, if your fund has remained inactive for that period (you have not paid any contributions).
Some funds have been sending this letter across the board even if you have been ‘active’ in making contributions.
The cancellation if you do not ‘Opt In’ will take effect from 1st July 2019.
We have started fielding some phone calls from a number of our clients have some form of insurance cover through a Super Fund that either doesn’t receive contributions into it, or hasn’t received a ‘top-up’ rollover into it, over the past 16 months.
What do you need to do?
What you need to do now, will depend on the Super fund your insurance is with. Some Funds get you to confirm you want to keep the cover in place, even if you’ve got a regular rollover going into the fund to ‘top’ it up. Some will only need you to confirm you want to keep the cover, if no activity has happened in the fund for 16 months.
When you get an email from one or more of your Super funds with a subject line:
“Your insurance will be switched off” or
“Your insurance cover is about to be turned of”
You need to take the steps outlined in the email to keep your cover. Some of them will make it very easy to do, some less easy… but most should be as simple as a couple of button clicks.
Please make sure you take the steps to keep your cover in place. If unsure about your need for cover please let us know and we can review or talk you through your situation.
If you don’t opt-in and it gets cancelled, you may not be able to put it back in place, if your health history has changed.
If in doubt give our office a call or send us the email you receive and we can talk you though it based on your situation.
Seek out further advice and start your journey to being free around your money and creating wealth with understanding.
Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics. Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra, Newcastle and Sydney to achieve their life and wealth outcomes. Money Mechanics Pty Ltd (ABN 64 136 066 272) is a Corporate Authorised Representative (No. 336429) of Infocus Securities Australia Pty Ltd (ABN 47 097 797 049) AFSL and Australian Credit Licence No. 236523