Why your insurance cover may be at risk of being cancelled
Written and accurate as at: May 04, 2019 Current Stats & Facts
From 1 July 2019, new Protecting Your Superannuation laws come into effect. There are several measures being introduced to ensure that your superannuation account balance is not unnecessarily eroded by fees and insurance premiums, particularly those deemed as 'inactive' or those with low account balances.
One of the measures being introduced is that all insurance held through a superannuation policy must be cancelled if the account is deemed as inactive.
What does 'inactive' mean?
A superannuation account is deemed 'inactive' if it has received no contributions or rollovers into the fund for a continuous period of 16 months.
If you do hold insurance within your superannuation, you may have recently received a letter or email from your Superannuation Trustee advising you of these new rules. As a warning of this change, letters were sent to members who were identified as having an account that had been inactive for a period of 6 months.
What can you do?
If you wish to retain your insurance cover, you must notify the relevant Superannuation Trustee prior to 1 July 2019. You should have received an 'Opt In' form which can be completed and returned. Some fund managers also have the option of opting in online.
What happens if I don't 'Opt-In"
If you do not Opt-In to keep your insurance AND your account does not receive any contribution for a continuous period of 16 months, your insurance will automatically be cancelled, regardless of whether premiums are being paid and up to date at the time or not. Please note that if at any stage down the track you wish to reinstate your insurance cover, you may need to provide further medical and employment information and could be subject to full underwriting.
What happens if I DO 'Opt-In'
If you do 'Opt-In' and notify the Superannuation Trustee that you wish to keep your insurance, this instruction will remain on file indefinitely. Therefore, should you not make a contribution in any consecutive 16 month period, you will not be contacted, your account will not be flagged as inactive and your insurance will not be cancelled. You can still advise that you wish to cancel your insurance at any time.
If you have received a letter or are concerned that you may be affected by this matter, please contact our office on (02) 9233 4111 or email us to discuss.