Legislation passed in February 2019 has led to superannuation funds sending out letters to those with accounts which hold valuable personal insurance and have not received a contribution to the fund since October 2018.
This now means that superannuation fund trustees will cancel the insurance cover held in inactive accounts unless the member has elected to retain the insurance.
Why is this happening?
The legislation change is due to the fact a huge amount of people ignore their superannuation, open new funds with each new employer and insurance premiums can erode a small superannuation balance.
So rather than waiting for people to review accounts, consolidate and ensure there is a plan in place for funding premiums – the plan is now to just cancel the insurance if there have been no contributions to accounts, which is how they deem them inactive.
Why I’m not happy about it?
You might be surprised to learn that automatic acceptance cover which is often the type of cover in your super is in some cases the only type of cover some people can have.
I personally am considered un-insurable. This is due to a long list of pre-existing health conditions so I feel really lucky that I have a superannuation fund which holds my life insurance.
If I was like the greater Aussie population and perhaps had not consolidated my accounts and my employer contributions were being paid into a different account than the one which holds the insurance, then I could lose this valuable cover.
We all know post is not the most reliable way to receive information, which is why I implore you all to please look at your superannuation statement or call up your adviser or your fund to check what’s in place is still relevant for your needs and is going to stay in place.
What should you do?
- If you have been ignoring your super – now is the time to stop!
- Review your insurance coverage to determine if it’s still relevant to your needs.
- Complete the form to opt-in to retain your insurance.
- Call your fund and check they receive the form
If you are unsure about these steps or you are feeling the urge to use your too hard basket, reach out to an Adviser for a chat. You can book in with our team via the link on our website.
Cancellations are to commence from 1 July 2019.
If you receive one of these letters, please don’t ignore it.
If insurance cover is cancelled, you may not be able to replace it.