SMSFs and life insurance

Q: I am a self-employed businessman with my own DIY super fund. I would like to know if I can arrange insurance(s), for example, death, etc through my fund with the premiums paid from the fund? Could you recommend any companies that may supply these services?

The short answer to your first question is: yes you can purchase insurance within your fund, but be sure the policy is in the fund trustee’s name (‘as trustee’) rather than your name only.

Three types of insurance are usually available within a super fund, including a self-managed super fund (SMSF). You can generally purchase the following types of insurance via a super fund:

• Life insurance
• Total and permanent disability (TPD) insurance
• Income protection insurance

SuperGuide doesn’t recommend life insurance providers, or insurance brokers, but a potential starting point is the SuperGuide Directory (see link on the right-hand side of this web page). You can also check out some of the policies offered by the larger super funds and see if you like the terms and conditions. You can then check the product disclosure statements for the life insurance providers. An insurance broker can shop around on your behalf for the best deal, but watch out if the broker is branded by one company because then you’ll only be offered products from one organisation, which may or may not be suitable.

Unlike ‘group’ cover offered by large funds when you join via an employer, you’re likely to have to undergo a medical and pay more for individual insurance cover. I’m aware of some SMSF providers who have negotiated bulk deals on insurance cover for SMSF members.

Note: Life insurance premiums are not tax-deductible for personal income tax purposes, but premiums are deductible within a super fund.

The following insurance articles set out below, which also explain the types of insurance cover above, may also assist you:

• Four reasons to buy insurance via your super fund
• Life insurance: Hey, does super have a deal for you!
• Life insurance: One in five parents will die early, or be too sick to work

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