Insurance Review a critical part of Succession Planning

In the light of the recent news about ASIC conducting a detailed enquiry into CommInsure regarding irregularities of payments to several terminally ill customers and loose definitions of conditions of release around critical illness, it is important to probe and assess how could these circumstances impact our personal situation

Insurance benefits whether its Life, Total Permanent Disability, Trauma or Income Protection generally can be a substantial part of any payout towards ones Estate Planning strategy for their surviving loved ones .

Most investors that buy insurances through their superannuation or outside need to ascertain their risk mitigation strategies, on an ongoing basis. The focus should not only be on the right amount of life, disability and income protection insurance, but should also be on ensuring that the claims will be tenable and actually paid in the right amount , to the right person and at the right time .

The challenges could be many. Whether it relates to:

Valid nominations that are reviewed on an ongoing basis
Tax implication of benefit payouts
Testamentary wishes of the insurer executed through proper documentation
Trustee succession planning mainly for SMSF,s ( remember Binding Death Benefit Nomination can be challenged)
Evaluate Death Benefit payout whether a pension stream or lump sum is the better option
Liquidity and Debt risks for ongoing SMSF,s on death benefit payouts
Increasing or decreasing insurance's within or outside superannuation based on changing circumstances
Anti-detriment payments made for certain death benefit payments and its corresponding liabilities
Impact of Regulation 4.07D becomes effective from July 2014 and may prohibit certain death benefit payments in Super
And there could be many other potential challenges depending on your personal situation

Within superannuation and in particular SMSF,s there are important requirements for compliances in relation to Life Insurance . Breach of the compliance requirements can result in severe penalties to the Trustees. This calls for a proper Trustee Action Plan and Trustee Documentation structure.

Insurance Review is an integral part of any Risk Mitigation strategy that can make all the difference and it can ensure that when payouts are triggered, they are made appropriately, to your dear and near ones .

We are happy to discuss your Insurance and Superannuation requirements. As part of our integrated services, we can offer a Full Insurance and Superannuation Review.

If you wish to take this up further, please contact me to fix an appointment :

Vic Singh CA