Early access to super: Could I lose my life insurance?

A federal minister has shot down claims that the government will force the cancellation of life insurance policies for Australians relying on the early access to super scheme.

Addressing the Financial Services Council’s Life Insurance Summit 2020, the assistant minister for superannuation, financial services and financial technology, senator Jane Hume, dispelled what she called “fake news” that she has heard repeated too many times around the government’s early access to super scheme – a measure introduced earlier this year in response to the COVID-19 crisis.

The senator rebuked the idea that any individual’s super “that drops below $6,000 as a result of accessing the superannuation funds will have to cancel their insurance under the government’s putting members first changes”.

“This simply is not true.”

“Of course, if an account doesn’t have enough money to pay the premiums on an ongoing basis, well then coverage won’t continue. In addition, super funds themselves may have their own rules that require the cancellation of insurance on accounts where balances are too low,” she explained.

According to the senator, “insurance coverage should be something that people take into account when they make the decision to access their superannuation”.

To help Australians in making such a decision, Ms Hume flagged the government’s development of resources in conjunction with ASIC on the MoneySmart website.

It means, too, that clear and effective communication from funds to members about their insurance “is more important than ever at this time”.

Ms Hume said that for Australians who have questions about the impact of accessing superannuation early or the role that insurance plays, “the first port of call should be the trustees themselves” of the individual’s super fund.

“They know their own fund, their own super fund’s circumstances,” she commented.

“Ultimately, though, it is a decision that individuals need to make for themselves, taking into account their own unique circumstances,” she advised.

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Article reproduced from Nest Egg by Grace Ormsby

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Zac Zacharia (Managing Director) has been assisting clients to create wealth and secure their futures for over 14 years.

He is also an accomplished presenter and educator

Co-authoring the popular investment book, Property vs Shares.