SMSFs in the dark on life insurance products
Around two-thirds of financial advisers have cited a lack of knowledge as the main reason for the shortfall in the take-up of life insurance cover in the self-managed super fund (SMSF) market, the latest research from AIA Australia has found.
Of the 400 respondents - made up of advisers, brokers and accountants - 21 per cent identified life cover already being held outside the SMSF as a barrier to getting life insurance, followed by the accessibility of such products (12 per cent) and the cost (7 per cent).
According to AIA Australia general manager of life insurance Damien Mu, advisers have an opportunity to add value to the client experience by educating members on the benefits of life insurance.
Due to changes to legislation, the Superannuation Industry (Supervision) Act now requires trustees to consider insurance for their members as part of the fund's investment strategy, and AIA has been working closely with its adviser partners to address this issue, he added.
The report also found that 45 per cent of respondents said very few of their SMSF clients held life insurance within their DIY super fund, potentially missing out on several tax benefits.
Over the next six to 12 months, 82 per cent of advisers predicted a significant increase in the take up of life insurance within SMSF's DIY fund.
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