You can access certain types of insurance through your self managed super. You can insure yourself and your family against the event of your death, total & permanent disability or loss of income due to accident or illness.

It can be more cost effective to buy these types of insurance through a super fund. If you buy Life and TPD insurance outside super, you pay for the premiums with your 'after-tax' salary. However, when you take out insurance through super, the premiums are paid out of your super contributions and therefore do not affect your day-to-day income.

Types of Insurance using your SMSF

Life Insurance
Life Insurance provides a lump sum payment to your family on your death or diagnosis of a terminal illness. Life Insurance is available as a policy on its own, or in a policy that includes Linked Total and Permanent Disability Insurance.

Total & Permanent Disability (TPD) Insurance
Total and Permanent Disability Insurance provides a lump sum if the insured person suffers Total & Permanent Disablement. Typically this means that you have been continuously incapacitated for a period of time and the incapacity is such that it is unlikely you will ever resume your usual occupation again. Total and Permanent Disability Insurance can be Linked with your Life Insurance Policy or can be a Standalone Policy.

Use your SMSF to Fund Premiums
Importantly you can use the funds in your SMSF to pay for your Life Insurance and / or Total & Permanent Disability Insurance Premiums alleviating any cashflow concerns about how to fund the Insurance Premiums. As an added benefit Life Insurance and Total & Permanent Disability Insurance Premiums paid by your SMSF may be tax deductible, providing up to an effective 15% reduction on the annual premium.

You select what Insurance Type you want
Importantly Life Insurance and Total & Permanent Disability Insurance through your SMSF is optional. You are under no obligation to have Insurance in your SMSF if you choose not to.
 

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