Insurance held in Superannuation
Thursday, December 8, 2011 by Wakeful Partners |
| Taxonomy: Hints / Tips, Industry News
Now is the ideal time to review your personal insurances (life, total and permanent disability (TPD) insurance) to ensure that you achieve the best overall position including:
- Ability to have your premiums paid by your superannuation fund (self managed superannuation fund or other).
- Maximise the taxation deductibility of your insurance premiums
- Maximise and maintain your own personal cash flow
- Ensure the best outcome is achieved if a claim on a policy is made
Advantages of Insurance in Superannuation
There are several reasons why having insurance in a superannuation fund makes good senses (and you do not have to have a self managed (do it yourself) fund to take advantage).
- Premium for death and total and permanent disability insurance are tax deductible (these payments are not deductible outside of super).
- Having your superannuation fund assists with payment of your premiums assists with personal cash flow.
- Proceeds form any claim and payout are exempt from capital gains tax.
- Amending taxation legislation now allows tax deductions for premiums that cover own occupation (ability to return to your current employment) rather than general occupation (1).
Income Protection insurance cover is tax deductible when paid personally and the process from any claim are assessable income. As access to these funds is usually needed for short term requirement then it is preferred that this cover held outside of superannuation rather than have any payout caught in super and not accessible.
Trauma policies can be held in superannuation provided that the proceeds received on any payout remain in the superannuation fund until the member meets a condition of release (age/retirement). Generally cancer, stroke or heart attack by itself may not satisfy a condition of release).
(1) From 1st July 2011 deductions will only apply to the extent of a general occupation premium (excess above this will not be deductible).