In the lead up to the end of the financial year, Asteron has announced a key underwriting concession for clients transferring cover out of superannuation.
Asteron has taken this step to balance what it calls an unintended consequence associated with the Government’s decision to lower concessional superannuation contribution limits.
Until 30 June 2010, advisers will be able to transfer their clients’ life insurance cover out of their superannuation accounts into non-super contracts without the need for any underwriting.
Explaining the insurer’s initiative, Asteron General Manager, Jordan Hawke, highlighted the potential impact on superannuation account balances of the lowering of the Government’s concessional contribution limits.
… clients may be forced to choose between funding their life cover through super, or maximising their super contributions
With the advent of these lower concessional limits, Mr Hawke contends clients may be forced to choose between funding their life cover through super, or maximising their super contributions: “In many cases, that means life insurance is being cancelled,” said Mr Hawke, adding:
“… we want to ensure that we’re making it as viable as possible for our adviser’s clients to keep their insurance, that’s why we’ve waived the requirement for underwriting to take place again, and are accepting customers who wish to transfer to ‘ordinary’ life cover, no questions asked.”
Asteron details three factors that mean diverting super contributions to fund insurance may no longer be the best retirement planning strategy for clients:
- The reduction in super concessional (before‐tax) contribution limits. Some clients may be at risk of breaching the contribution limits and would therefore be required to pay additional tax.
- A large number of consumers are approaching retirement, who may not have sufficient super balances on which to retire
- Consumers are taking a greater interest in their finances following the global financial crisis, and are more conscious of the fees and costs associated with their super and insurance
Click here to download a brief video interview in which Mr Hawke outlines Asteron’s rationale for taking this initiative.
