November 2020 Newsletter
ASIC report highlights potential issues for those with insurance inside super
ASIC has just released research on consumer experiences for those with insurance inside their super.
It is estimated that half of all superannuation accounts in Australia have life insurance attached. This can be insurance that is recommended by an adviser or simply the default insurance your fund offers.
The research commissioned by ASIC focused on fund members who were not using a financial adviser for their insurance.
The report exposes a few important issues.
In short, when consumers tried to find out information about the insurance or wanted to make changes, it wasn’t so easy. Around a third of the participants in the study, on trying to find out more than the provided factual information, were left feeling “confused, overwhelmed or uncertain.” For others in the study the information was not easily understood and led to delay in engaging with their super fund about their insurance. For a copy of the report click here.
The research included people who had very simple needs that could often be fulfilled simply by going to the industry fund’s website. However, others received so little information that they realised all is not well with the information they received.
Whenever I look at a person’s industry fund super, about 90% of the time, i.e. almost all of the time there is something very wrong about their insurance.
Very few have too much insurance but most people have too little or far too little insurance. Their insurance can be quite expensive these days and the conditions may be very unsuitable – for example their cover might automatically and strongly reduce once they are over 50 but they may want to keep their cover longer or their income protection cover may be missing or of very poor quality.
For some people industry fund insurance cover is exactly right and I am always happy to point that out but for 90% in my experience they would be better off if they made substantial changes. The confusion the ASIC researchers experienced in the people they interviewed is just the tip of a large iceberg.
Please feel free to contact us if you would like a free review of your insurance. Very often I can find people better policies and / or reduced prices. In addition when taking out insurance with us, you also get the benefit of regular reviews, assistance with questions and support at claim time, all for no extra cost.
And now for something completely different:
If you have a discretionary (family) trust and any potential beneficiary is not an Australian citizen (for example a NZ citizen) and living outside Australia – read on.
SuperCentral put out an alert which you can find by clicking here.
In essence, if your trust has a potential beneficiary who is not an Australian citizen it is treated as foreign and will have to pay surcharge land tax and surcharge duty including retrospective tax and duties unless they change their trust deed before December 31st, 2020.
This is an arcane change but for those concerned it can cost a large amount of money.
Again and as always feel free to contact us with any questions.
AFP LRS GradDipFinPlan
Life Risk Specialist | SMSF Specialist Advisor
MBiostats | GStat Graduate Statistician
Accredited Aged Care Professional
Accredited Estate Planning Professional
Authorised Representative 308223