SMSF Life Insurance

Question

Hi my business partners and I have a self managed super fund started in 1999. In 2003 we both applied for life insurance with no annuity and payable on death. The policy was set up for me but the insurer has registered me as the owner and the superfund as the payer. For the last 5 years I have paid my life insurance from the super fund. I am now advised that the policy needs to be in the name of the superfund i.e jon pigott as trustee for HDAA superfund or it cannot be claimed. The insurer will not change the owner of the policy and cites section 66 of the super fund act saying that the policy is an asset and the super fund cannot acquire an asset from a member. Is this correct and waht can I do as its basically a clerical mistake by the insurer. I also wonder is the policy an asset as it has no value until I die at which stage it is there to benefit my family. In a newsflash you wrote that if an asset ahs to be held in just the personal names of the trustees then prepare a minute declaring that the asset was purchased on behalf of the SMSF. Is this another option. Help Please

Answer

Jon,

Sorry for the delay in responding I have been trying to get onto my insurance broker who has been on holidays. What you say is right the policy does have to be owned by the super fund. Whether the superfund can acquire it from you is neither here nor there if the insurance company is not prepared to co operate. I am wondering whether their resitance is because they no longer want to insure you. Has something happened since you took the policy out? It maybe better to start a new policy rather than worrying whether anything will come back to bite you later. You have a good point with the minute but that minute would have to have been made when the policy was taken out.

I would like you to ring to Tony Townsend on 07 5491 8977 to discuss your insurance situation. Tony has a lot of connections within the industry so would have a lot better chance than you or I of getting them to co cooperate. He also tells me there are some options to roll policies over that are less than 5 years old without any loss of cover on health issues that have come about since the original policy was taken out.

I can trust Tony to go into bat for you just for the sake of fixing things, he won’t be trying to flog insurance, he loves sorting this sort of stuff out.

Tony has mentioned to me several possible options you have but he needs to know more about your personal circumstances so please give him a call.

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