Changes to insurance held in super
As part of the MySuper reforms, new rules have been introduced to restrict the type of insurance that can be held within superannuation funds. These rules, which commence on 1 July 2014, aim to ensure members of superannuation funds can access insurance benefits that are paid to the trustee of their super fund on their behalf.
From 1 July 2014 superannuation funds, including self managed super funds (SMSFs), will be prohibited from providing new insurance policies to members unless the insurance can be paid out under one of the following conditions of release:
• death;
• terminal illness;
• permanent incapacity; or
• temporary incapacity.
As a consequence, total and permanent disability (TPD) insurance with an “own” occupation definition, trauma insurance and extra benefits income protection policies will not be available within super funds as these type of polices may not meet the required conditions outlined above.
Any insurance cover already in place within superannuation at 1 July 2014 can be retained under grandfathering provisions.