Trustees have typically given limited regard to their insurance needs, with the Cooper Review finding approximately 13 per cent of SMSFs had insurance products as part of their investment strategy.
“The amendment to SIS regulation 4.09 has changed this and trustees should take this opportunity to really consider their insurance needs,” said Reece Agland, superannuation products and services manager at Superannuation Australia.
“Technically speaking, all trustees need to do to meet the new requirement is minute that they have considered their insurance needs, but if that is all they do they are missing the opportunity to protect the interest of members.”
Mr Agland cited the Cooper Review’s findings that 12,430 deaths of married people of working age occurred in 2008. An additional 235,000 workers with dependent children suffered serious injury or illness and 17,000 were unable to continue work due to those injuries or illness.
“We often underestimate the probability of death or permanent injury,” Mr Agland said. “We all want to believe that we will live a long, healthy life, but the facts suggest otherwise.
“The chance of death or permanent injury is real and it is time trustees took the situation seriously.”
What exactly is the point of this change? Why should the trustee consider insurance for the members? Shouldn’t the members consider insurance for themselves and structure it accordingly? If that is in an SMSF – then the trustee can arrange it. Otherwise I fail to see why the trustee should do anything at all. And given that the trustee and the members are one and the same, isn’t this whole thing just a gigantic waste of time? It seems to me that some government official needed something to do, so did some “make work” to make life difficult for trustees and their accountants/advisers. Perhaps they thought we don’t have enough to do already without having to advise all our clients of yet another pointless change!