Super strategies for your SMSF
Wednesday 24 January 2024 at 11:00 am AEDT
Are you making the most of having an SMSF? In this webinar we will cover strategies only available to SMSFs, including access to certain investments, effective tax and estate planning, as well as the benefits of investing as a couple or family.
Q. I have insurance outside super for death, permanent disability, income protection, and trauma. I’m wondering if there would be an advantage to holding this cover inside super instead?
A: The main difference when insurance is held via super is that you can make pre-tax (or tax-deductible) contributions to your account to fund the premiums for all your cover. Your super fund is also able to claim a tax deduction for the premium cost, and generally passes this benefit on to you via a refund of contributions tax.
Outside super, only income protection premiums are tax-deductible.
The range of cover available in super is however different from what is on offer outside. No new trauma cover may be issued inside super, and permanent disability (TPD) definitions must align with the permanent incapacity condition of release which specifies you are suffering from incapacity that makes it unlikely you will return to work in a job you are suited to via education, training, or experience.
Outside super, you can apply for TPD cover that will make a payment if you are unlikely to return to your current job. It can be simpler to show you’re unable to do your current job (rather than any job you are qualified for), and so payment can be easier to obtain under this type of policy.
It is also important to consider the tax implications of holding your cover in super. Death benefits from super are taxable if paid to a beneficiary that is not a tax dependant, and TPD payments are generally taxable when paid to you. You may wish to increase the cover amount you hold to ensure enough remains for your needs after the payment of tax. Income protection payments are taxable at your marginal rate no matter whether the policy is held inside or outside super.
Learn more about insurance in super, tax on death benefits, and disability benefits from super.
Is the new year time for a new super fund? If you’re concerned your fund is a dud, now is the time to make a comparison and get your balance somewhere it can work hard for you. Take a look at how to compare super funds in 7 easy steps.
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Important: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.
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