Changes to your superannuation insurance
The government recently changed the rules regarding insurance cover held through superannuation as part of a ‘Protecting Your Super Package’. The reforms have been designed to protect Australians’ superannuation savings from undue erosion by fees and insurance premiums.
On 1 July 2019, any insurance held in an inactive super account will be cancelled. ‘Inactive’ generally means that no contributions have been made into the account for at least 16 months. On 1 July the insurance cover for inactive members will be cancelled unless they notify the Super Fund that they wish to retain the cover, known as ‘opt in’.
You may be affected if you have maintained an old super account for the purpose of retaining the existing insurance cover. This is a commonly used strategy. While the government’s intention is to protect super balances, there may be unintended consequences where insurance that is needed is cancelled.
If you are affected, you will receive a communication in early May from your Super Fund asking you to opt in if you want to keep your insurance cover. The instructions from the Super Fund should be straight forward and if you want to retain your existing insurance cover, you should complete the form and follow the instructions provided to opt in to your insurance. If you receive a communication in relation to this from your Super Fund, it’s important that you don’t ignore it.
Super Fund accounts that receive contributions are considered ‘active’ and will not be affected by these changes.
If you are unsure whether you’re affected or would like to discuss your options, please contact a First Financial team member today.