Knowledge of life insurance offers is the biggest barrier to self managed super fund members taking it up within their fund, said AIA Australia.
AIA Australia surveyed approximately 400 advisers on the knowledge and take-up of life insurance within the self managed super fund (SMSF) sector.
Two thirds (66%) of the respondents to the survey said a lack of knowledge was the main cause of a short fall in SMSF life insurance cover.
Other barriers identified included life cover already being held outside the SMSF (21%), accessibility (12%) and cost (7%).
“Education around insurance within an SMSF is a real value-add for advisers and accountants and the changes to the SIS Act, 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,” said Damien Mu, general manager of life insurance, AIA Australia.
Nearly half (45%) of those surveyed said very few of their SMSF clients held life insurance within their do-it-yourself fund.
AIA Australia said this could indicate that many SMSFs are missing out on the potential tax advantages of holding life insurance within their fund. These advantages may include funding cover out of pre tax dollars.
By Ben Collins