From 1 July 2014, not all insurance policies are allowed inside Self Managed Superannuation Funds (SMSF). The new insurance policies will only be allowed to the extent that they align with the new regulation 4.07D of the SISR.
Trustees of the SMSF now must not provide an insured benefit in relation to a member of the fund unless the insured event is consistent with a condition of release specified as follows:
- Death (item 102 of Schedule 1)
- Terminal medical condition (item 102A of Schedule 1)
- Permanent incapacity (item 103 of Schedule 1)
- Temporary incapacity (item 109 of Schedule 1).
The table below illustrates the existing and upcoming insurance requirements within the SMSF.
However, the new regulation does not apply to:
- The continued provision of benefits to members who joined a fund before 1 July 2014; or
- The provision of benefits under an approval granted before 1 July 2014 under subparagraph 62(1)(b)(v) of the Act.
These grandfathering rules also allow trustees of superannuation funds:
- To increase or decrease the level of cover; and
- To adjust the associated premiums accordingly.