Insurance groups and financial advisers are targeting the forgotten self-managed superannuation fund (SMSF) market as the next sector to be educated about under-insurance.
AIA Australia has launched the AIA/AGI SMSF policy, and the WHK group will offer automatic life cover of up to $750,000 to more than 20,000 clients.
Estimates of the size of the SMSF under-insurance market vary widely, according to which group has done the surveys and how the figures are sliced.
SMSF Strategies’ principal Grant Abbott said insurance was not held by a total of 68 per cent of members of the Australian SMSF Members Association (ASMA), while the rest had some form of life insurance either through their SMSF or separately, or both.
But, Abbott said, of those surveyed, 40 per cent said they were not interested in life insurance through their SMSF, and 22 per cent had separate life insurance. Only 6 per cent said they would like to have life insurance through their SMSF.
RiceWarner director Richard Weatherhead said the firm’s November 2010 survey showed that only 13 per cent of SMSFs had insurance, “so this sector could be described as the ‘forgotten’ sector from a life insurance perspective”.
“Some insurers have identified this as a growth opportunity but we have yet to see any significant inroads being made into the SMSF risk insurance market,” he said.
This figure of 13 per cent was very slightly up on the figure of 12.7 per cent given by Jeremy Cooper when chairing his review of Australia’s superannuation system.
WHK head of financial services John Nantes said financial advisers “still appear to focus on the investment asset for a client and fail to consider what else the client is potentially exposed to as a result of their asset allocation advice or client purchase decision-making.
“Property within SMSFs for example remains an asset favoured by many trustees and investment properties required landlord insurance as well as general insurance. Yet often an adviser puts little effort in to helping clients fulfil these requirements,” he said.
AIA general manager life insurance Damien Mu said the SMSF Master Insurance Plan “gave online access to insurance at competitive wholesale rates – potentially saving SMSF members up to 25 per cent or more on standard death, total and permanent disability (TPD) and income protection (IP) cover”.
He said the plan also provided immediate decisions for cover up to $500,000 death and TPD, transfer of existing cover, online applications that could be completed in less than five minutes, and it could also cater for SMSFs that used platforms as an administrative tool.
