Insurance in Super: Will Yours Be Cancelled?
Important changes to insurance inside Super – Will your insurance be cancelled on 1 July 2019?
The federal government has made some changes regarding insurances held within superannuation that are due to take effect on 1 July 2019. They have some significant implications for a large number of Australian men and women. If you have or think you might have insurance inside your superannuation fund you should check now whether you need to act.
What is going to happen?
Anyone whose superannuation account has not received a superannuation contribution within the last 16 months will automatically have their insurance cancelled. This will occur on 1 July 2019 unless the superannuation fund has received specific instructions that you wish to keep this insurance.
Who might this affect?
- People who have been unemployed or out of the paid workforce for an extended period of time and therefore not received a contribution to their super fund within the last 16 months.
- People who have started a new super fund with their new employer, but kept the old superannuation fund open to keep the insurance and therefore have not made a contribution within the last 16 months
- People who have an automatic rollover of their super funds to pay for their insurances within superannuation.
What should you do?
- As this is document is not personal advice it has not considered your personal circumstances. ASIC, through it’s MoneySmart website, has provided the following general guidance
Cancellation of insurance on inactive accounts
From 1 July 2019, super funds will cancel insurance on accounts that haven’t received contributions for at least 16 months. Your fund will contact you if your insurance is about to end.
If you want to keep the insurance, you must tell your super fund or make a contribution to that account. You may want to keep your insurance if you don’t have any through another fund or insurer and you have a particular need for it (e.g. you have children or other dependants or work in a high-risk job).
- As described above there are two ways to prevent your insurance being cancelled either:
- Advise your super fund you wish to keep the insurance (they can provide you with details of the form or nature of the letter you need to send to do this) and where to send it OR
- Make a contribution to the account, so that it is received into the account prior to 30 June 2019.
Whichever of these paths you decide to choose you should make sure you act now to avoid any possible delays
- If you are impacted and have not taken steps to retain the cover by 30 June 2019, your insurance will be automatically cancelled. The super fund will be unlikely to be able to reinstate the cover. Whenever you cancel or let an insurance cover lapse you should be aware that you run the risk that if you choose to re-apply for that cover you may find that you are unable to reinstate that cover, exclusions or loading applies depending upon your personal, work and health situation.
But shouldn’t my super fund have warned me?
Superannuation funds have been writing to their members over the past couple of months, advising them of the situation. However, many people move house, or change email addresses and the super fund may not have been able to make contact you.
If you think you might be impacted and you have not heard from your super fund, you should contact them as a matter of urgency to find out if you are impacted and what to do about it.
Can’t remember which fund your super is with?
The ATO keeps a record of everyone’s super fund. You can access a list of the super funds you have by logging onto www.mygov.gov.au.
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