The issue of clients making questionable health declarations, and not keeping their adviser and insurer up to date about their health conditions, was raised this week by insurance claim specialist Trevor Battersby.
The Founding Partner at TPD Claim Support said a new ATO advisory has highlighted cases where patients signed medical declarations claiming mental health issues to access their super funds for cosmetic surgery.
In a paper, Separating Fact From Fiction on Accessing Your Super Early, ATO Deputy Commissioner Emma Rosenzweig said super can only be accessed on compassionate grounds in very limited circumstances, such as critical medical procedures.
…We have seen an increase in dodgy advice and misconceptions…
“We have seen an increase in dodgy advice and misconceptions around when individuals can access their super early” she said.
Medical treatments undertaken solely for cosmetic purposes would not normally qualify for compassionate release of super, states Rosenzweig.
Unintended consequence
Battersby said one unintended consequence for consumers embarking on this process to access funds could come at claim time.
“It seems there are cases of dentists getting psychologists or psychiatrists on side, and stating that there’s a mental health reason for the patient to have cosmetic surgery they couldn’t otherwise afford,” said Battersby.
“This could have a knock-on effect when it comes to claiming on insurance or applying for new cover, as a history of mental illness could significantly affect the outcome. A claim could also be declined due to non-disclosure of a pre-existing condition.”
Advisers
Battersby said financial advisers need to be on guard if clients seek their opinion about accessing super for medical expenses such as veneers or other cosmetic procedures.
“My advice to advisers and planners is to caution clients and ask them to read the ATO statement before signing any questionable medical declaration,” he said.
There’s another cost to drawing down super funds too, said Battersby. Citing Treasury data, he said those aged 30 who took $20,000 from their super fund during 2020/2021 can expect their retirement balance to be reduced by $69,300.
“That’s an expensive set of veneers,” he said.
