Almost 85 per cent of SMSF members aged 18 to 64 do not hold life insurance cover, new research from Plan for Life has revealed.
In an analysis of the life insurance market, the research house found that over 630,000 indiviudal SMSF members do not hold insurance, particularly in the Gen Y, X and baby boomer brackets.
Commenting on the findings, AFA chief executive Brad Fox told Risk Adviser the number of uninsured SMSF members is alarming.
“I think that the number is incredibly high and shows an enormous gap that needs to be addressed,” Mr Fox said.
“Part of the issue is that many trustees rely on an expert to assist them in their role as trustee and more often than not that expert is their accountant.”
“The accountant doesn’t have the authority to act as a financial adviser as well, [so] are they raising the issue of insurance sufficiently with these trustees, and if they are not, if they don’t feel it is their role how can we [make sure] that the trustee themselves receives information to ensure they have considered holding insurance,” he said.
Mr Fox also pointed out there is a significant opportunity for advisers to capitalise given the significant number of SMSF trustees that don’t have insurance.
“We shouldn’t assume that they would all need insurance, but if they did, that is nearly $1.7 billion of underinsurance and that is based on the average premium in Australia at the moment,” Mr Fox said.
“While it is a great opportunity, the real [concern] here is the personal situation of the self-managed super fund members. Have they taken a serious look at protecting themselves and their family and their assets,” he said.