ATO New Regulation – 2012 (No. 2) Consider Insurance Needs of Members

Insurance in Self-Managed Super Funds

Insurance in Self-Managed Super Funds

Recent Regulations by the ATO now require Trustees to consider whether they need to hold insurance for the Members of the fund, and to review this as part of their regular Investment Strategy Obligations. The Regulation can be found at:

The types of insurance that need to be considered include Life Insurance, Total and Permanent Disability (TPD), and Income Protection. The important part is to document some proof, so a Minute or Resolution is required.

Liam Shorte provides some relevant points to consider:

So how far do you go as a Trustee in documenting your reasons for their decision? Is a full-blown explanation required or a simple statement that they have considered the issue and have come to a set conclusion either way for each member?

Whilst going into detail may sound the correct option to show the trustees have fully discharged their duty, those reasons set down in writing could be questioned later and the process found negligent which may expose the Trustees to claims that they have breached their duties. You may think that an SMSF most often consisting of mum and dad and maybe a few children in a family group like this may be unlikely to end in conflict, but potential Beneficiaries of Estates, with the advantage of perfect hindsight, may seek redress to put pressure on Trustees to consider their claims.

A possible solution may be for the Trustees to discharge their duty by requesting from each Member to indicate whether the Member wishes to have cover for any or all risks identified in the fund. If a Member said that they do not wish to have or do not need, and will not submit to any underwriting requirements, then the Trustees would be in a position to claim that they either have discharged their duty to the Member.

As the new requirement has been attached to the investment strategy operating standard of SIS Reg 4.09, it seems that the Trustees will also have to reconsider the issue of insurance each time the investment strategy is reviewed and on the occurrence of any significant change to the circumstances of a member or the fund such as a large contribution or withdrawal.”

Read his Post HERE

If you need further help, then give us a call for a no-obligation chat. Simply issuing a resolution is not enough. Individual situations need to be considered per person.

Don’t take the quick answer. Call us today and ask to speak to Jim, our Life Insurance professional – 0407 361 596


About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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