Given the complexities of holding insurance cover through superannuation, the introduction of new regulations (SIS Regulation 4.09, effective from 2012/13 onwards) creates a need for many SMSF Trustees to review their insurance needs.
Recent changes to the Superannuation Industry Supervision (SIS) Regulations have widened the scope of SMSF investment strategy considerations. This was introduced in response to the Cooper Review which found that fewer than 13 per cent of the almost 500,000 SMSFs in Australia had insurance. In particular, if you are a SMSF Trustee, you are now required to consider (and document in minutes) life insurance needs.
Conducting a review of each fund member’s personal circumstances and providing a suitable recommendation is something that JustInvest can assist you with. As life insurance specialists, we can provide you with the financial advice that is needed to cover all necessary due diligence. We can determine the cost/ benefit value of insurance and create a strategy that yields the best outcome.
Our advice process includes these steps:
- We carry out a needs assessment, including an asset and liability review
- We identify the cover required – this involves determining the types and amounts of insurance cover each member needs and deciding whether that cover should be held within or outside super
- We consider existing cover, including Life, TPD (Total and Permanent Disability) and Income Protection insurance, along with other types of cover
- We select the methodology for allocating premiums and claims proceeds
- We review the SMSF trust deed to ensure that insurance in the proposed format is permitted
- SMSF Trustees will then hold a trustee meeting and produce minutes – the Trustees should document the reason(s) why the decisions were made (this will provide evidence the new requirement has been addressed)
- Once agreed, the SMSF Trustees ensure that the insurance is properly disclosed in annual member statements
- We then review the insurance annually and update it where necessary
Contact us today to discuss your needs
For more information refer to:
http://ato.gov.au/Super/Self-managed-super-funds/
