Insurance in super is changing on the 1st of July 2019
Do you hold insurance in your superannuation account? Changes are coming that may affect your cover. As of the 1st of July 2019, insurers are required to cancel the insurance policies held in inactive superannuation accounts.
So, what does this mean? Well, if you have an account balance of under $6,000 or do not receive employer contributions and you hold insurance in your super fund, then, unless you take steps to keep it, your insurance may be cancelled on the 1st of July.
The government has made these changes in order to protect people who hold multiple small superannuation accounts and may inadvertently be doubling up on insurance, and therefore insurance premiums. It is designed to make sure that small super balances are not eaten away by insurance premiums.
While this is good in concept, the implementation has landed us all with a few complications. Firstly, as default insurance is usually low, having more than one life policy may not be a bad idea. Secondly, and the biggest worry is that people, who would like to keep their insurance, will have it cancelled.
Many people move their super to a more appropriate product, keeping a small balance in their previous fund to keep their insurance going. This may be because they have health issues that stop them from getting new insurance. The insurance in the old fund may be all they can get, losing it would leave them vulnerable.
How do you keep your insurance?
Your insurance/superannuation provider will be writing/emailing you should you be one of those facing the cancellation of your insurance. I encourage you to open all mail or emails from your providers as they will contain very important information. The two options to make your account active are to make a contribution or complete the form you will be sent by your provider telling them not to cancel your insurance.
It is very important, if you want to keep your insurance, to follow the instructions in that communication.
Here is a summary
If your account is deemed inactive you will receive a letter or email
Please open that communication
Follow the instructions in that communication if you want to keep your insurance in place
If you receive a letter/email and are unsure of what to do, feel free to get in touch with us here at BGN Financial.
If you do not receive a communication from your insurer/super provider, you are not caught up in this.
I hope this blog has given you a heads up, please feel free to get in touch with any questions that you have.
Don't forget to register for our smart.happy.money workshop in the 25th of May. Click Here.
Until next time
Stay in touch with all of our content. Click here to subscribe.
Ben Graham-Nellor is an adviser, coach, blogger and speaker who has worked in the financial services industry for over 15 years. He believes that by educating and advising people today, they can improve their tomorrow.
BGN Financial Management Pty Ltd is a Corporate Authorised Representative 468796 of Professional Investment Services Pty Ltd AFSL 234951 ABN 11 074 608 558 www.centrepointalliance.com.au
The information in this communication has been prepared on a general advice basis only. The advice has been prepared without taking account of your specific objectives, financial situation or needs. Accordingly, you should, before acting on the advice, consider the appropriateness of the advice having regard to your objectives, financial situation and needs. In cases where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a Product Disclosure Statement (or other relevant information statement) and consider such document before you make any decision about whether or not to acquire the product. For these reasons, it is imperative that you seek advice from your financial adviser before making any investment decisions.