Time to take action if you wish to retain your insurance through your inactive super fund.
You may have recently received a letter from your super fund, suggesting that your insurance may be cancelled. This is a result of new federal legislation passed earlier this year, known as the Protecting Your Superannuation Package. The objective of this legislation is to ensure that people are not paying for insurance that they do not need. The assumption is that people who are no longer contributing to a super fund, most likely also no longer need the insurance available through these funds. This is not universally the case and you therefore will need to take action if you wish to retain your insurance.
In many cases our clients are holding onto the insurance in a super fund, even if that fund is no longer being used for ongoing contributions.
From 1 July 2019, superannuation funds are prohibited from providing insurance where:
- the member’s account is inactive for a continuous period of 16 months or more, and
- the member has not elected to obtain or maintain insurance in that fund.
That is, from 1 July 2019 a member must make an election to hold insurance in an inactive super account.
What's an 'inactive' account?
An inactive account, for the purposes of this measure, is a product where a contribution has not been received or rollover in respect of the member. Any inactive period prior to 1 July 2019 will be included in the calculation of the 16 month period.
Therefore some clients may have their insurance cancelled immediately on 1 July 2019.
What do you have to do, to keep your insurance?
Insurance inside super may be the only policy you have - therefore take steps to protect your cover!
You will have the opportunity to elect to retain your insurance, by completing your superannuation fund’s election form and returning it promptly to your super fund. Please contact your superannuation account directly for the form.
It is particularly important, where your contact details change, that you advise the super fund. If the super fund does not have your current contact details, then you will not receive the notification letters and your insurance will ultimately be cancelled without your knowledge.
We're here to help.
If you require assistance with this, or unsure if this impacts you, please do not hesitate to contact our wealth management team to discuss. Ulton's wealth management team can be contacted on (07) 4154 0425.
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