June 8, 2019
Disclaimer: This post does not constitute financial advice and is only general in nature. We always recommend speaking to a financial adviser before making decisions about the adequacy of your insurance requirements specific to your individual needs.
Changes are coming to superannuation from July 1 which may mean you could lose the insurances included with your superannuation fund member because often superannuation funds with low balances and no contributions tend to be eaten up by administration and insurance fees.
If you have a balance of below $6,000 and not had any contributions for over 16 months, your superannuation fund balance may be transferred to the ATO for safe-keeping to limit the amount of superannuation fund balances being gradually reduced by fees.
This may leave a person with a superannuation fund balance of $6,000 without important insurances such as Total Permanent Disability Insurance, Life Insurance and Income Protection Insurance that they may have been paying for significant periods of time. However, the counter argument is that gradual erosion of superannuation fund balances to pay for insurance is not in the interest of account holders.
If you do not contact your superannuation fund provider by July 1 to notify them you would like to maintain your insurance cover, it will lapse.
The superannuation funds have been writing to members that fit into these categories to notify them that these changes will be taking place. If you have not kept your post address/email address up to date with your superannuation fund you may not know that this will be happening. It is important to keep them up to date on your correspondence.
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