Specialist approach to SMSF insurance
With Australia’s acknowledged underinsurance gap as a background, obtaining insurance within a self-managed super fund (SMSF) can provide an interesting challenge. After all, while tailored superannuation arrangements can boast some significant advantages (in terms of investment choice, fee control and overall flexibility) the cost-effectiveness of group insurance is not among them.
OnePath superannuation strategy manager Graeme Colley (pictured) has suggested that maintaining an account balance in a previous super fund is one means of obtaining powerful death, total permanent disability and income protection insurance coverage at reasonable group rates. But what if a full rollover into the SMSF is the trustee’s preference?
What if, for whatever reason, membership of a previous super fund and obtaining insurance over on that basis is not an option?
One answer may be to obtain insurance at wholesale rates through what is effectively an SMSF group plan. That’s a gap that the new AIA Australia SMSF Group Insurance Plan, to be administered by Australian Group Insurance (AGI) and issued by AIA Australia, hopes to fill.
The new product will be launched in the next few months and will include death only, death and total and permanent disability, total and permanent disability and income protection covers.
AGI marketing manager Donna Selby said that the plan’s rates would be quite competitive, even against traditional group insurance rates.
“So SMSF trustees or members can actually transfer their existing insurance cover over up to a certain amount,” she said. “They’ll actually go on to a website, which is currently in development, and they’ll be able to get a quote online to compare against their existing cover.
“Ultimately, it will be up to the individual and their advisor as to whether or not they’ll be better off, but these are rates that are very sharp,” Selby continued. “We’ve had it on hold for a while as we’ve been doing industry research, but we’re confident that these rates will stack up well against what is already being offered and provide SMSF members with a good insurance alternative.”
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