New rules for people under 25 who have super fund balances under $6,000
Your Super rules are changing (again)
The new rules called Putting Members' Interests First start April 1st 2020.
Why is this important?
Most people automatically get a small level of Life Insurance and Total & Permanent Disablement (TPD) insurance when they join a super fund.
- From 1 April 2020, if you're under 25 (or with an account balance below $6,000) and have insurance automatically provided to you by your super fund, the insurance rules have changed.
Read in this article:
The new rules mean
- for some super fund members, their insurance cover will be switched off on 1 April 2020 unless they make a choice to keep it
- the new rules will force Super funds to cancel insurance cover for members with account balances of less than $6,000, unless you contact them in writing that you wish to keep your insurance cover.
Who is affected by the changes?
For people already with super fund-provided life insurance
- Existing super fund members with account balances below $6,000 as at 1 November 2019 must tell their super fund by 31 March 2020 if they want to keep their cover or they may have their insurance canceled.
For people joining a super fund and expecting automatic levels of life insurance to be available
- New super fund members joining from 1 April 2020 need to be aged 25 or over, and have an account balance of $6,000 or more, for insurance to be automatically provided. Members who are under 25 must opt-in manually.
What do you have to do?
- If you’re under 25 and have automatic insurance provided to you by your super funds and you want to keep it, (you’ll need to tell your super fund through their app or through a phone call).
What does this mean for parents with adult children?
Life insurance is designed to provide your loved ones with a backup plan in case you unexpectedly pass away or it can be converted to cash for you if you become terminally ill.
Either way, many Australians have little to no backup available to them - and this includes those under 25 who may have partners, young families or even be the financial backup to aging parents.
These new rules for people under 25 with low super fund balances will only add to the risks parents and young people have to learn to proactively manage, otherwise what was designed to Put Members Interests First could inadvertently strip away the only insurance support they ever had.
Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
