SMSFs urged to get advice on insurance
Self-managed superannuation fund (SMSF) trustees would be well advised to seek professional help in dealing with the growing regulatory burden confronting them, according to Centric Wealth technical specialist Natasha Panagis.
Specifically referencing the recently imposed requirement for SMSF trustees and directors to consider providing insurance to their members, Panagis said this was likely to prove difficult.
"We think it would be very difficult for most Australians to understand the full scope of their insurance requirements without some sort of formal training," she said.
Panagis pointed out that while the change with respect to insurance within SMSFs was mandatory, it was up to the trustees to determine the type and level of insurance cover they should offer to members, whether inside or outside the SMSFs.
As well, she warned that a recent upturn in SMSFs accessing loans to buy investment properties could accentuate the need for appropriate insurance.
"Where trustees have borrowed money to buy property, not having life and total permanent disability (TPD) cover can become a major problem if one of the members passes away unexpectedly or becomes disabled and can no longer contribute into super," Panagis said.
She said the key risk in such circumstances was that the SMSF would go into negative cash flow, which could be exacerbated if existing debt arrangements were in place.
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