Holding insurance inside vs outside superannuation
Personal insurance should be viewed as a necessity, whatever your personal situation is; holding some form of insurance will help ease the burden on yourself and family, should a serious event occur.
You can decide whether you hold your insurance inside or outside of your superannuation fund; your personal or family’s circumstance will determine this. Life, TPD ‘any’ occupation and income protection are held inside superannuation, whilst TPD ‘own’ occupation and trauma are not permitted within your superannuation. Some benefits of holding insurance within superannuation include being able to pay premiums with pre-tax dollars, making premiums cheaper and meaning cash flow will not be impacted (important to consider if you are paying a home loan or have high expenses). Death benefits may be taxed depending on who the beneficiary is and you can choose the amount of cover that you want to be covered for. Holding insurance outside superannuation can be beneficial if you make a claim the funds are paid directly to the policy owner making the release of funds quicker. Another benefit is being able to insure an ‘own’ occupation TPD and, also, income protection premiums that you pay outside of superannuation are tax deductible.
If you would like to talk to one of our financial advisors about the best place to hold your insurance, please contact us.