Lawyer points to insurance issues for licensed accountants
Accountants who can provide insurance advice under their AFSL have been warned that one of the biggest issues with insurance advice is product replacement advice.
David Court partner Holley Nethercote says most accountants won’t be able to provide class of product advice for insurance, but those who have chosen to obtain full ASFLs need to be aware of the common issues with insurance advice.
In the past few years, a contentious issue has been where people have lost their pre-existing cover and had to go under new waiting periods and in some cases found out they have completely lost their cover.
“It’s been a big problem area of the year, particularly product replacement advice for life insurance policies,” Mr Nethercote said.
When accountants provide advice on insurance for SMSFs, for example, they may want to consider advising the client to retain a small amount in an industry or retail fund.
“They can get much cheaper insurance and on much better terms through the group cover in an industry fund than they can get through the SMSF, when you’ve got to go through the personal life insurance market,” Mr Nethercote said.
The personal insurance market, he said, is a lot more expensive and a lot more subject to underwriting.
“So I think that’s probably the main issue with insurance in an SMSF context and that would be the main planning opportunity I think for advisers and for the clients.”