Insurance is something we all should consider having, and be glad when we never need to use it.

Many industry and retail super funds have minimum levels of insurance as a default, or default option in their fund so that member are protected. An SMSF is different in that the member needs to apply for their own insurance within the fund as there is no default level of protection.

The government is so concerned with the level of underinsurance in Australia that in 2012 they made amendments to the Superannuation Industry Supervision (SIS) Act that requires all superannuation trustees to consider insurance for one or more members of the fund;

The Regulation specifies that trustees are required to consider whether the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund. This will ensure that members consider their personal circumstances in regards to their need for insurance cover such as life insurance.

The governments concern is backed up by Rice Warner Actuaries who calculate that over 95% of families do not have adequate insurance, which means Australians are underinsured by $1.37 trillion.

The types of insurance cover available to investors inside their super fund includes;

• Life Insurance
• Total Permanent Disablement (TPD) Insurance 
• Income Protection Insurance

At Sapient we can provide general product advice to investors to assist their decision making process to decide on the adequate level of cover to protect them and their family.