Self-managed super funds are now the fastest growing part of the superannuation market in Australia, with more than one million of us being members of an SMSF.
SMSFs have become a popular way for Australians to build their retirement savings because they generally offer greater control and flexibility of your super investments.
And while thousands of new self-managed funds are being established every year, there are some technical areas that can ‘trip up’ the average SMSF super member.
According to Matthew McCabe* of Judge Financial Planning, insurance can be one of the trickier aspects of SMSFs that members need to be aware of.
“As seems to happen regularly with superannuation laws, legislation changes can and do affect what people can and can’t do with their super savings.
“New insurance policy regulations were introduced in July 2014 to ensure greater consistency between SMSFs and regular super funds,” says Mr McCabe.
“It’s now a little clearer as to what types of insurance can and can’t be purchased by SMSFs.”
And while Life, TPD (Any Occupation) and Standard Income Protection policies can be purchased by SMSFs as shown in the table, Mr McCabe warns that this cover will have some restrictions compared to the same cover purchased outside super.
In the case of life insurance, for example, payouts from SMSFs can be subject to tax under certain circumstances, unlike policies outside super where payouts are generally tax-free.
“Insurance within SMSFs can be complicated where exceptions exist, so it’s worth exploring your personal situation with a financial adviser,” he says.
We are ready to help. We are equipped with the knowledge and expertise to help you get the most out of your SMSF, by showing you how to set up and develop a sound investment strategy that reflects your needs. Contact our office today on 02 4032 7934, or you can send an email to firstname.lastname@example.org
*Matthew McCabe is an Authorised Representative of RI Advice Group Pty Limited (ABN 23 001 774 125), AFSL 238429. This editorial is current as at July 2015. The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429.