A total of 66% of
respondents – including advisers, brokers and accountants in
Australia – have cited the knowledge gap as the main barrier to
members of self-managed superannuation (SMSFs) taking up life
insurance, according to a findings from a survey released by AIA
Australia.
Other barriers
identified included life cover already being held outside the SMSF,
with 21%, citing this as an issue. Another 12% and 7% of
respondents identified accessibility and cost as obstacles for
obtaining life insurance within the SMSF sector.
Go deeper with GlobalData
SMSFs – also known as
DIY superfunds –are for Australians who wish to take on the
responsibility and control of managing their retirement
savings.
SMSFs perform the same
role as other funds, by investing contributions and making them
available to members on retirement. The difference is, generally,
that the members of SMSFs are also the trustees, and therefore
control the investment of their contributions and the payment of
their benefits.
Damien Mu, general
manager of Life Insurance for AIA Australia, said there was an
opportunity for advisers and accountants to educate clients about
the benefits of including life insurance within their SMSF.
Education’s
role
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By GlobalDataMu said: “Advisers and
accountants are constantly looking at how they can best meet the
needs of the burgeoning SMSF market. Providing education around
insurance within an SMSF is a real value-add for advisers and
accountants and the changes to the SIS Act [Superannuation Industry
(Supervision) Act 1993] which require trustees of SMSFs to consider
insurance for their members as part of the fund’s investment
strategy, reinforces the importance of this issue.”
Mu added: “While we’re
all familiar with Australia’s underinsurance problem, the growing
SMSF market is another opportunity for the industry to reopen the
conversation and provide trustees with education on life cover to
reduce the gap.”
AIA Australia added that
82% of respondents said they expected to see a significant increase
in the number of their SMSF clients getting life insurance within
their fund over the next six to 12 months.
