Multiple accounts about more than insurance
Self managed super fund (SMSF) trustees hold multiple accounts for a range of different reasons, rather than just for insurance as the anecdotal evidence might suggest, according Andrea Slattery, CEO of the Self Managed Super Fund Professionals' Association of Australia (SPAA).
Commenting on insurance provision within self managed super funds in late September, Slattery said that it quite often came down to simplicity.
"People can and do hold numerous accounts for a range of reasons and, other than people suggesting that they're holding the account just to hold the insurance, we don't know the reasons behind that," she said. "But in the SMSF world, the majority of individual super policies are held in the SMSF environment simply because you can only get an insurance policy on you personally.
"You're not a part of a pooled fund so you often can get a lot larger insurance policy, if you wish, than you could in a larger fund," Slattery continued. "You might even have a range of insurance policies within your superannuation."
Alternatively, Slattery said that when a member joined an Australian Prudential Regulatory Authorithy-regulated fund, they would also join that fund's insurance program, where all members were given cover to a certain level without needing a medical assessment.
"So depending on the fund, that level might be the balance of your contributions right up to a certain dollar limit, the highest being around $200,000," she said. "But what a lot of people will be concerned about is that once you take out an insurance policy, no matter where it is, once you close that down you lose the date that you started it and you have to reapply and get medicals and all those sorts of things."
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