Insurance is a vital protection for your family and your assets. Insurance premiums can be paid by an SMSF on behalf of the Fund’s beneficiaries (members). As the recent changes being introduced by the ATO, it is compulsory for Trustees to give consideration whether they should hold a contract of insurance that provides insurance cover for one or more members of the Fund. It is the Trustee’s responsibility to select an insurance policy that best suits the Trustee’s needs.
There are 3 types of insurance policies as listed below the SMSF can purchase for its members:
- Life insurance
- Total and permanent disability (TPD) insurance
- Income protection insurance (the income protection insurance in the SMSF does not include redundancy cover)
To be able to claim the insurance in the SMSF, one of the following condition of release must be met:
- Death of a member
- A terminal medical condition
- Permanent incapacity
- Temporary incapacity
Tax Considerations
It is worth noting that although Life Insurance premiums are not deductible in a personal capacity as an income tax expense, they are deductible as a tax expense in an SMSF.
Below are some examples of Insurance Providers:
Please note that the Trustees are responsible for choosing an Insurance Provider that is best suited to the Trustee’s needs. Trustees may consult with external insurance brokers. Please be mindful that they might carry out extenstive search on personal history and it can be costly, ranging from $5,000 to $30,000. Superannuation Warehouse does not give any recommendations as to which Insurance Provider the Trustees should utilise.
1. Australian Group Insurance – Your SMSF will pay the insurance premiums on your behalf. Use the SMSF provider code AUS005 toapply for a new policy at www.agismsf.com.au
An online application will take you about five minutes and you will receive an immediate decision. The insurance plan provides Death and TPD cover up to $1.25 million and Income Protection up to $10,000 per month. You can also transfer existing insurance cover (up to certain limits) from your retail policies and super funds.
2. Other insurance brokers – Trustees can use a bank or insurance broker of their choice to take out an insurance policy for their SMSF.
Commissions
Superannuation Warehouse may receive an upfront and trailing commission from the Insurance Providers noted above.
For more info relating to insurance, please watch the video below.
For more information on transferring benefits into your SMSF, please see here.
