Insurance held under Superannuation
Using a superannuation policy to fund the premiums for Life, TPD & Income Protection Cover.
Buying personal insurances through super makes super sense.
This is because you may be able to take advantage of a range of ‘up-front’ tax concessions that are generally not available when insuring outside super.
Purchasing your insurances inside superannuation allows you to:
Benefit from ‘up-front’ tax concessions for example:
- if you’re self-employed, you may be able to claim your superannuation contributions as a tax deduction regardless of whether they are used by the fund to buy insurance or investments.
- if you’re an employee and are eligible to make salary sacrifice contributions, you may be able to buy insurance through a superannuation fund with pre-tax dollars, and
- you may be eligible for a government co-contribution that could be used to cover the cost of insurance, if you make personal after-tax superannuation contributions (and meet certain other conditions).
Pay for insurance without reducing your disposable income for example:
- Instead of making additional contributions to cover the cost of insurance, you can arrange to have the premiums deducted from your existing superannuation balance. The trade-off with this option is that you will use up some of the money that could otherwise meet your living expenses in retirement.