Written

For

The

Australian

-

Life

insurance

need

not

be

a

problem

for

SMSF

investors

Here's an uncomfortable truth for anyone running their own super fund: unlike your friends in industry super, no one is automatically giving you a safety net. If you die or become disabled tomorrow, your SMSF won't have a default insurance policy quietly ticking away in the background.

And yet, SMSF trustees are legally required to consider insurance as part of their investment strategy. Ignoring it isn't just risky — it's a compliance issue.

The good news? There are workarounds, and they apply whether you're in an SMSF or not.

Life insurance premiums have been climbing steadily over the past five years, with some insurers pushing double-digit annual increases on the back of Covid-related and mental health claims. Even those who thought they'd locked in certainty with 'level' premiums have been stung. No one has escaped.

If your renewal letter has given you a nasty shock, the first move is to benchmark your policy against the market — either directly, via a comparison tool, or through an adviser.

For those without cover, there are three main pathways. Direct insurance — the "get covered today" TV ads — is easy but expensive because insurers assume the worst about your health. Fully underwritten retail policies are the cheapest and most feature-rich, but harder to secure once you're over 50 or have any medical history. Sitting in the middle is automatic cover through industry or retail super funds.

Here's a tip I share often: if you can't get affordable retail cover due to health, occupation, or lifestyle risks, opening a super account with a fund offering automatic acceptance can be a genuine workaround. Just be aware you'll need to maintain contributions and minimum balances.

One final point — your lifestyle matters more than ever. Smokers pay double. High BMIs attract loadings of 50 to 200 per cent. Quit for 12 months and you're classed as a non-smoker. Consider it a financial incentive to get healthy in 2025.