SMSF Life Insurance

Many people have insurance through their superannuation fund and this often comes as an inclusion when you first open the fund. The premiums are then taken out of the balance of your super, in order to pay the insurance company/super fund.

Many people have insurance through their superannuation fund and this often comes as an inclusion when you first open the fund. The premiums are then taken out of the balance of your super, in order to pay the insurance company/super fund.

In recent years it has become increasingly common for people to manage their own superannuation contributions and investments, known as Self Managed Superannuation Funds (SMSF).

When you remove your superannuation from a retail fund and transfer into your own, you will find that you no longer have the insurance available and will need to seek independent SMSF life insurance.

Lifebroker can help you set up your own SMSF life insurance policy, but can also assist in adding some valuable benefits such as total and permanent disability (TPD) and even income protection insurance.

Why would I insure through my SMSF?

The benefit in doing this, is you still have the valuable protection you need by having the insurance, with the same ability to pay for your premiums through your SMSF and have more control over the sums insured, the benefits and the beneficiary (for life insurance).

You may also find that you have a better quality of product, compared to the original policy held through your retail super fund.

Who can insure with the SMSF?

Any qualifying member of the SMSF is eligible to insure themselves with the SMSF life insurance, this will be at the discretion of the trustee.

Where does my benefit get paid?

Any benefit will be paid into the SMSF, as it is the controlling entity. The exception to this would be a life insurance payment. You are able to sign a binding nomination of beneficiary, which allows you to nominate an external beneficiary in the even of your death.

Are the premiums tax deductible?

Generally premiums are not tax deductible unless the policy is a whole of life or endowment policy (ATO ID 2002/371), the benefit is that the premiums are coming out of your super, as opposed to coming out of your wallet.

In some circumstances, if you are self-employed, you may find that the premiums are tax deductible.