It may be more affordable to take out life and total and permanent disability (TPD) insurance in a super fund rather than outside super.
How does the strategy work?
If you buy life and TPD insurances in a super fund, you may be able to take advantage of a range of concessions not available when insuring outside super. For example, in the 2017/18 financial year:
These concessions can make it cheaper to insure through super, or help you get a level of cover that might otherwise not have been affordable.
Another benefit of insuring in super is that you can usually arrange for the premiums to be deducted from your account balance without making additional contributions to cover the cost.
This can make insurance affordable if you don’t have sufficient cashflow to pay the premiums outside super.
The trade-off, however, is that you will use up some of your superannuation savings that could otherwise meet your living expenses in retirement.
Other key issues to consider
SUPER TIP – Simple explanation of super strategies:
The following links are other super tips – click below
Convert your super into a tax-effective retirement income
Top up your income when cutting back work
Sacrifice pre-tax salary into super
Top up your super with help from the government
Convert business capital into tax-free retirement benefits
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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It's also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.