Changes to insurance provided by SMSFs

From 1 July 2014, trustees of an SMSF cannot provide an insured benefit in relation to a member of the fund unless the insured event is consistent with one of the following conditions of release of a member’s super benefits:

  • death
  • terminal medical condition
  • permanent incapacity (causing the member to permanently cease working)
  • temporary incapacity (causing the member to temporarily cease working).

An insured event covered by a trauma insurance benefit (which covers conditions such as cancer, stroke, and heart attack) is not consistent with any of the above conditions of release.

SMSFs that provided a trauma insurance benefit to a member who joined the fund before 1 July 2014, and was covered before that date, are allowed to continue to provide that benefit to the member after that date. A member cannot change the type of trauma insurance cover they had before 1 July 2014; however, they can increase or decrease the level of their existing cover from that date.

For more info please follow ATO link here.

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SPAA Specialist Auditor

SPAA Specialist Auditor

Shiv Parihar is a SMSFA accredited SMSF Specialist Auditor™. He provides SMSF auditing services independently, conflict free and in accordance with professional audit standards.

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