The Financial Planning Association (FPA) has called on the Federal Government to investigate measures that would allow people to shift insurance between superannuation accounts.

The move would help reduce the number of people with multiple accounts, the association says in a pre-budget submission.

The superannuation reform bills passed last week have retained default insurance for those members under 25 years old or with low-balance accounts, if they are active accounts.

The biggest barrier to consolidation of super funds is the inability to port insurance. The FPS says the older a fund member gets, the more difficult it is to take out a life, TPD, or income protection policy.

Policies which are held inside super accounts are ended when the account is closed, and can’t be transferred.

The FPA says the government should also remove all taxes on life policies paid from superannuation to mirror arrangements for personally held insurance.

At minimum, the untaxed element calculations for all death benefits, and all tax on death benefits paid to adult children, should be removed.

If taxation was applied consistently across insurance, regardless of where it was held, it would be much easier for consumers to compare different policies, and would remove the demand for strategies to remove tax liabilities for superannuation insurance, the submission says.