From 1 July 2014, trustees of an SMSF cannot provide an insured benefit in relation to a member of the fund unless the insured event is consistent with one of the following conditions of release of a member’s super benefits:
- terminal medical condition
- permanent incapacity (causing the member to permanently cease working)
- temporary incapacity (causing the member to temporarily cease working).
An insured event covered by a trauma insurance benefit (which covers conditions such as cancer, stroke, and heart attack) is not consistent with any of the above conditions of release.
SMSFs that provided a trauma insurance benefit to a member who joined the fund before 1 July 2014, and was covered before that date, are allowed to continue to provide that benefit to the member after that date. A member cannot change the type of trauma insurance cover they had before 1 July 2014; however, they can increase or decrease the level of their existing cover from that date.
If you require further information in relation to this please do not hesitate to contact Matthew Grapsas of our office.