There is a school of thought which is in favour of keeping life insurance outside Super. It talks about the adverse impact of funding premiums with Super. To add, it talks about inadequate coverage (case in point being Trauma Insurance) and the legalities of the Binding Death Nomination which can make payment claim a long-drawn out process.
Insurance inside Super
On the contrary, keeping insurance inside Super has its distinct advantage, too. Just to cite a couple, there are great many tax deductions for the taking and, of course, there is no chance of default with the premium payments.
Restrictions on insurance held within Super
This is not the point though. This small background I only intended to create in order to come to the more crucial aspect of compliance protocols for insurance within Super. Since 1st of July, there are certain set of restrictions on how insurance policies can come to exist within Super.
SIS regulation
For one, no policy of insurance can be held within Super till the time it passes all the criteria of the SIS. The condition of release laid by the SIS regulation includes demise, illness of terminal nature, and temporary and permanent incapacities.
What’s in and what’s not
Trauma Cover and Own Occupation TPD cover do not meet these criteria and hence cannot be a part of within-Super insurance, precisely why the cover is sometimes deemed inadequate. Life insurance, Any Occupation TPD (mind you, it’s not the ‘Own Occupation TPD that we are talking about) and Basic Eligible Income Protection Insurance can be held within Super.
It is important to establish that the policies held prior to 1st of July 2014 can still be retained just as they are and that the new regulation is only meant for those policies which are established post 1 July.
