Under the Superannuation Industry (Supervision) Regulations 1994 – Reg 4.09, all SMSF trustees must regularly review their investment strategy which includes whether all trustees have the need for insurance or not.
We’ve previously discussed underinsurance in Australia and in much the same way, SMSF trustees need to consider the insurance needs of their members. Through SMSFs, you accumulate savings for your retirement. Many small business owners have an SMSF and think of their business as their retirement plan. Insurance helps protect trustees and their members against any unforeseen circumstances.
WHAT HAPPENS TO RETIREMENT PLANS IF YOU CAN’T WORK?
To understand the need for insurance through SMSF, it is important to consider some factors such as below:
- As of 2011, almost 96% of businesses in Australia were small businesses
- The ABS investigated that small businesses are closing at a rate of 44 a day
- As of 2013, there were almost 520,000 SMSF’s in Australia
- As of 2014/15, there were 17,163 people filing for bankruptcy in Australia
Over time, we create a lifestyle which we wish to maintain or enhance, however this can change as the above business related investment statistics illustrate. It is evident that SMSF’s are increasing; however with a large number of small businesses closing and people filing for bankruptcy, you could find your self in a similar situation and adequate insurance can help you through these tough periods.
To help you understand insurance in SMSF, we have created a short video which you can use to find out the reasons to consider insurance for a SMSF and the benefits of holding insurance in SMSF, and the benefits of insurance in SMSF both financially and from a protection point of view.
Watch the video to learn more.
ARTICLE AND VIDEO SOURCE:
The information provided in this page is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. You should seek independent advice from your financial adviser before making any decisions.
AUSTRALIAN MORTGAGE AND FINANCIAL ADVISERS (AMAFA)
Phone: 07 3378 2056
Fax: 07 3378 2069