Self-managed super fund (SMSF) trustees have poor knowledge of life insurance products, resulting in lower levels of protection, a survey has found.

Some 66% of 400 advisers polled by AIA Australia say lack of knowledge about insurance offerings is the main reason for a shortfall in cover.

Other barriers included trustees holding policies outside their fund (21%), accessibility (12%) and cost (7%).

Nearly half (45%) of those surveyed say very few of their SMSF clients hold life insurance within their fund.

AIA Australia GM Life Insurance Damien Mu says many SMSFs are missing the potential tax advantages of holding cover within their fund.

He says the situation creates an opportunity for advisers to educate clients.

“Advisers and accountants are constantly looking at how they can best meet the needs of the burgeoning SMSF market,” Mr Mu said.

“Providing education about insurance within an SMSF is a real value-add for advisers.

“The changes to the Super Industry (Supervision) Act requiring trustees to consider insurance as part of the fund’s investment strategy reinforce the importance of this issue.”  

The AIA survey says 82% of advisers expect to see a significant increase in SMSF insurance business in the next six to 12 months.