Have you checked your industry super fund recently?

As industry funds account for just over $1 trillion dollars or 25 per cent of all funds invested via superannuation, there is a good chance if you are reading this you might have an industry super account and if you do, you might want to check up on it.

The Federal Government has put in place new strict Federal laws like the Protecting Your Super and Putting Members’ Interests First packages and others relating to inactivity within superannuation accounts.

The impact of these changes are deep and widespread but one area which is starting to impact on clients are the rules surrounding risk insurance held with industry funds.

Often clients choose to move most of their super to a retail fund such as HUB 24 or Netwealth and leave the minimum required to keep their industry fund open so to keep the risk insurance offered by the fund.

However, now to comply with the above-mentioned new rules, they are reviewing individual accounts and in numerous situations are writing to the owner to act or face the closure of their risk insurance.

This is happening in a handful of specific situations. Under the new inactivity rules, the government now requires funds to cancel any insurance cover automatically if the account receives no contributions during the previous 16 months.

This will also happen if for whatever reason the account fund balance falls below $6,000 or if there is insufficient money in the account to pay the outstanding insurance premiums.

The Federal Government has also imposed a new rule that stop industry funds putting in place automatic default insurance cover for any Australian under the age of 25 years.

While there are some good arguments supporting these changes, it has clearly been challenging getting the word out and many members only realise they no longer have risk insurance when they go to make a claim on it.

It is possible to re-instate your insurance policy if you do review your superannuation account and find there is no risk insurance coverage there any longer, but it may well be more costly than it was originally.

That is the nature of risk insurance. The earlier you take it out and the longer you hold it, typically the cheaper it will be in your hands.

All of this means you should be mindful that your superannuation is an important source of wealth and you should be vigilant in opening and reading any mail from your super fund. No matter how boring it appears.