If you hold a Superanuation account that has been inactive (not received any contributions for 16 months or more) and you have not already notified your Super Fund that you wish to retain your insurance, it could be cancelled from 1 July 2019.
If you have already taken action, or you are certain that you only hold one super account which you regularly contribute to, you can ignore this message.
Most superannuation funds have a level of life insurance built into them. These policies are funded through the balance of the super fund.
Recently, the Federal Government introduced the Protecting Your Superpackage. Part of this package addresses the insurance that many Australians hold within inactive super accounts.
If you have more than one super account, it is likely that you have an inactive account. That is, you are likely contributing regularly to one account through your payroll process, while the other(s) don’t receive any funds throughout the year. If you have more than one super account, it is likely that you have duplicate insurance policies through these accounts.
The intent behind the legislation is to ensure that the premiums for insurance policies inside super don’t erode the balance of inactive accounts.
If this is cover you don’t need, it could be best if it is canceled.
However, the cover inside that super fund may be of value to you.
Many super funds have now commenced communicating with holders who have inactive accounts. You may have heard from your super fund.
This can be confusing, we are here to help you understand your situation and make the right decision for you.
As financial advisers, we have seen all sides of this debate in practice.
- We have been able to help clients claim on a policy they didn’t know they had and it has changed their lives for the better.
- We have worked with clients who thought they had cover which had lapsed, and it has had knock on effects for their own lives and that of their families.
- We have also worked with clients who hold more than one policy unnecessarily and been able to streamline things so they are not wasting money on premiums they don’t need. It is important, however, to compare the policies and what they offer as well as the premiums or cost before choosing one to cancel.
We strongly recommend speaking with an adviser to understand your situation and make an informed choice about what to do. Simply reply to this email and we will organise a suitable time for you. For more information, read on.
From 1 July 2019 super providers must cancel the insurance in any super account that’s considered inactive (ie no amounts, such as contributions or rollovers, made into the super account for 16 continuous months or more).
Super providers must tell their customers that they’re at risk of having their insurance cancelled and give them the opportunity to elect to keep it.
You can stop your insurance being cancelled by telling your super provider (in writing) you want to keep it. A written election to keep insurance must be made before the account has been inactive for a continuous period of 16 months. Once an election has been made, however, insurance will not be cancelled even if the account becomes inactive again in the future.
Making a contribution or rollover into the inactive account before the account has been inactive for 16 continuous months, or making regular contributions at least once every 16 months (eg weekly, monthly, quarterly or annually), means the insurance won’t be cancelled unless the account becomes inactive again.
You have the opportunity to change the type or level of insurance held through your account or cancel your insurance at any time, including before your account has been inactive for 16 months.
Super providers are getting in touch with their customers affected by the Protecting Your Super package to let them know that the insurance inside their inactive super account may be cancelled.
If you’re unsure whether you are affected, you can call us on 1300 346 837.
If you’ve been informed the insurance in your super may be cancelled soon, make sure you understand how the cancellation could affect you and your circumstances. See things to consider below.
Things to think about before deciding whether to keep your insurance
If your insurance is at risk of being cancelled, below are things you might like to consider when deciding whether keeping your insurance is right for you and your circumstances:
By doing nothing, you may lose the insurance cover in your super account or any ability to make a claim against this insurance cover.
It can be complicated for certain people to get insurance. For example, if you have a pre-existing medical condition, by cancelling your existing policy you may not be able to reinstate this cover to the same benefit level or get insurance elsewhere at the same premium.
Once you’ve decided if you want to keep the insurance or not, here’s what you can do:
If you have an AMP Policy, you can complete this online form using your account number. You’ll receive a confirmation that they’ve received your instructions, and they’ll make sure your insurance is not cancelled.
Download and complete this paper form using your account number. You will need to scan and email it to email@example.com, or mail it (no stamp required) to:
AMP Life Limited
PO Box 300
PARRAMATTA NSW 2124
Each super fund will have a similar process to work through. You can always get in touch directly with us and we can help you.
Please allow enough time for the form to get to your fund before the cancellation date (ie the date on which your super account reaches 16 months of continuous inactivity).
Please note: Making a contribution or rollover before your account reaches 16 months of continuous inactivity means your insurance will not be cancelled (unless your account becomes inactive again).
If you’d like your insurance cancelled before your super account reaches 16 months of continuous inactivity, you can call us on 1300 346 837.
Otherwise, your super fund will likely cancel your insurance as at the above date (unless it becomes active again in the meantime) and they should let you know once it’s been cancelled.
It’s a good idea to talk to a financial adviser about what’s right for your circumstances.
There are a range of other benefits and considerations for having insurance inside super. Find out more.
For any questions about how the Protecting Your Super package affects you, call us on 1300 346 837. Or speak to a financial adviser.
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