AIA Australia has joined with Sydney-based third-party insurance administrator Australian Group Insurance (AGI) to tackle the lack of life insurance in self-managed superannuation funds (SMSF).

Up to now the sector has not been able to access group insurance plans and has been denied access to competitive wholesale rates which are up to 25% less than retail products.

The new plan offered by AGI provides immediate cover up to $500,000 for death and total and permanent disability (TPD).

Underwritten life risk cover is unlimited under the plan and TPD is up to $3 million. Income protection insurance up to $30,000 a month is also included.

SMSF members can transfer existing cover using an online application.

AIA Chief Distribution Officer Damien Mu says this is the first group insurance offer aimed at the SMSF sector, which is estimated to be worth about $430 million.

“We believe the ability to quickly access comprehensive cover at competitive pricing will be an attractive proposition for the growing number of SMSF members,” he said.

“This offer will also benefit financial advisers, giving them an opportunity to sell life insurance easily into the SMSF sector.”