A super way to insure

You are probably aware it’s essential to have life insurance if you have debts and/or financial dependants. What you may not realise is that life (and total and permanent disability) insurance can be cheaper than you think if you buy it through super.

Why insure through super?

If you buy insurance through super:

• You may be able to take advantage of tax concessions and reduce the cost of your premiums or get a higher level of cover, than if you were to buy it separately.
• Your dependants (such as your spouse or young children) could receive unlimited tax-free lump sum payments in the event of your death.

What are the different types of insurance cover available through super?

Life insurance

Life insurance provides a lump sum payment in the event of your death.

This can be used to pay off any outstanding debts, such as your mortgage and help your family meet their ongoing living expenses.

Some super policies provide a certain level of cover which means you don’t have to go for a medical check-up, as you’re automatically covered for that amount.

Total and permanent disability (TPD) insurance

TPD is often included in superannuation policies and is designed to provide a lump sum payment in the event you become totally and permanently disabled and unable to return to work. The definition of total and permanent disability can differ depending on the insurance policy you have, so check the details. Take note of conditions such as whether you can return to work in any role or in your usual job, as this may affect whether you qualify to receive insurance benefits.

Note: Certain income protection policies may also be available within some super funds

More information

Every person’s situation is different, so if you would like more information about what insurance cover is best for you, please contact my office and I will go through the options with you. If you would like to know more about insurance and how much you might need, visit the MLC website www.mlc.com.au and follow the prompts to the Insurance Gap Calculator.

Insurance through super checklist

Here’s a list of things you could do now to get insurance cover without breaking your bank account.

Save through salary sacrificing

If you’re eligible to make salary sacrifice contributions you may be able to buy insurance through your super fund with pre-tax dollars, potentially saving you hundreds of dollars a year.

Use a co-contribution to pay premiums

If you’re employed, earn less than $61,920* pa and make undeducted (after-tax) super contributions, you may be eligible to receive a Government co-contribution of up to $1,000 that could help you cover the cost of insurance.

Use a spouse offset to pay premiums

If you make super contributions on behalf of a low-income spouse, you may be able to claim a tax offset of up to $540 that you could put towards insurance premiums for you or your spouse.

Claim a tax deduction

If you are self-employed, you could claim your super contributions as a tax deduction (up to certain limits). This is regardless of whether the contributions are used by the super fund to purchase investments or insurance.

* Includes assessable income plus reportable fringe benefits