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SMSF trustee underinsurance ‘alarming’

It is alarming to read the following article which clearly shows the behaviours of many australians has not changed over the years and many still not have enough cover to protect the innocent when they die.
Australians will insure their house and their car before they will pay for life insurance. Also many do not take out life insurance for the following reasons,

* They believe they will not die and it only happens to someone else
* They believe if they take out life insurance they may die and thats something they do not want to think about
* Insurance companies have raised the prices due to many that have not taken out insurances they are making the ones that have it pay higher premiums so as they the insurance companies still continue to pay the high commissions to the insurance sellers and maybe their business models also need to be revamped. Naturally the higher the costs the less people will take it out.

See story below sourced from IFA daily news feed-

Written by Scott Hodder

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 ifa 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.

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