Insurance 2 min read

Insurance in SMSF – What You Need to Know


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Insurance is an important part of protecting your financial future, whether your super is held in an industry fund or a Self-Managed Super Fund (SMSF). When moving to an SMSF, many people overlook one critical step—reviewing and, if necessary, replacing their existing insurance cover. Below are some common questions to help you understand the basics.

Insurance in Industry Super Fund

Industry and retail super funds typically provide default insurance cover when you join. This often includes life and TPD insurance, and sometimes income protection. The key advantages are:

  • Automatic cover (subject to eligibility)
  • Group pricing, which can be cost-effective
  • Minimal underwriting in many cases
However, these policies are generally standardised and may not fully align with your personal needs. Coverage levels may also reduce over time or be cancelled due to inactivity or insufficient balance.

Process of arranging Insurance in an SMSF

Review Existing Insurance - Before rolling over your super, it is essential to review your current insurance cover. Many people unintentionally lose valuable cover when transferring funds.

Assess Your Needs - Consider your financial dependents, debts and liabilities, income protection needs and long-term financial goals.

Obtain New Insurance Policy - Since existing cover usually cannot be transferred, a new policy must be arranged under the SMSF. This may involve:

  • Underwriting (medical and financial checks)
  • Policy structuring within superannuation rules

Policy Ownership and Premium Payments - The SMSF becomes the policy owner, and premiums are paid from the fund. This ensures tax-effective treatment and compliance with superannuation laws.

Ongoing Review - Insurance should be reviewed regularly to ensure it remains appropriate as your circumstances change.

Important: One of the most critical steps when moving to SMSF is ensuring you do not unintentionally cancel your existing insurance cover. Failing to do this can leave you and your family exposed to financial risk.

Our Role and How We Can Help

We assist you with the SMSF setup and administration process, including guiding you on the importance of insurance considerations as part of your overall SMSF strategy.

While we do not provide financial product advice or recommend specific insurance policies, we can:

  • Highlight key considerations around insurance in SMSFs
  • Help you understand the implications of cancelling existing cover
  • Refer you to qualified, licensed insurance advisers who can provide tailored advice
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Important Disclaimer

We are not licensed financial advisers and do not provide advice on the adequacy or suitability of insurance products. Any decision regarding insurance should be made after considering your personal objectives, financial situation, and needs.

You should seek advice from a licensed professional before taking out, modifying, or cancelling any insurance policy.

Frequently Asked Questions

Can an SMSF hold insurance?

Yes. An SMSF can hold certain types of insurance for its members, including life insurance, Total and Permanent Disability (TPD), and income protection.

What happens to my insurance when I roll over to an SMSF?

In most cases, insurance held in your existing super fund will cease once your balance is transferred. It’s important to review your cover before initiating a rollover.

Can I transfer my existing insurance into an SMSF?

Generally, insurance cannot be directly transferred. A new policy needs to be arranged within the SMSF. You'll need to ask your Industry Super Insurance company if they allow you to transfer the Insurance from Industry Super to your SMSF.

Is insurance mandatory in an SMSF?

No, but trustees are required to consider whether insurance is appropriate for each member as part of the investment strategy.

Can you advise me on what insurance I need?

We can guide you through the process and refer you to a licensed adviser, but we do not provide financial product advice.