Individuals transitioning to a Self-Managed Super Fund often risk losing the default insurance cover provided by their retail funds.
When transitioning to a Self-Managed Superannuation Fund (SMSF), individuals often risk losing the default insurance cover provided by their retail funds. This default insurance is usually cost-effective and is automatically provided. In most cases, it is issued without the need for underwriting, meaning it does not consider a member's personal details such as occupation, pastimes, smoking habits, or previous health issues.
Consequently, SMSF members may find themselves underinsured if they do not pay attention to personal insurance before rolling over their superannuation to an SMSF.
Existing members of an SMSF may reassess and tailor their insurance needs. Unlike the generic cover provided by retail funds, SMSF members can choose insurance policies that better match their personal circumstances and requirements. This personalised approach ensures that the insurance coverage is more suitable for their specific needs, potentially offering better protection.
Reviewing and updating personal insurance within an SMSF is crucial. By conducting a thorough assessment of their insurance requirements, SMSF members can avoid the risk of being underinsured at exactly the time it matters most — when a claim needs to be made.
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