We’ve partnered with Compare Club to bring you a range of life insurance policies to help you compare them side by side.
A self-managed super fund (SMSF) may primarily be a way to save for your retirement, but it can also allow you to purchase life insurance. If you’re wondering how these policies stack up against the rest of the market, Savvy can help you compare.
By comparing through us, you’ll be able to weigh up the inner workings of policies from some of Australia’s leading insurance companies to see how they compare to SMSF life insurance. You’ll get to consider different benefit limits, premiums and inclusions to get the best bang for your buck. Get a quote through us and start comparing today.
If you’re managing a SMSF so you have enough money for your retirement, you may get the option of taking out life insurance through your fund. Under laws passed in 2013, SMSF trustees must make life insurance available to members through their funds. While you aren’t obliged to take it out, funds are required to offer it regardless.
While SMSFs aim to help you put money away for retirement, they work differently from your standard superannuation fund which can also offer life insurance. The main difference is that SMSF members are also trustees, so it’s their responsibility to ensure the fund complies with rules around super and tax benefits.
By buying a life insurance policy through your SMSF, your premiums are paid straight out of your super fund rather than your bank account, meaning you won’t have to make out-of-pocket payments. Life insurance payouts are made to the super fund and subsequently distributed to your nominated beneficiaries. It’s essential to keep this in mind and let the recipients of your policy know about this process in case they need to claim on your behalf.
If you’re considering taking out life insurance through your SMSF, you may have a few options regarding the type of coverage you can purchase. These will usually include the following:
You can't purchase trauma insurance, as the only conditions of release applicable to life insurance through a SMSF are death, terminal illness or temporary or permanent incapacity. Own Occupation TPD cover, which means you aren’t able to return to your job but can continue to work in another position related to your experience, education and training, also isn’t available through SMSFs.
If you don’t want to purchase a life insurance policy through your self-managed super fund, you can buy a policy directly from an insurance company or through a broker. However, if you’re doing so, it’s important to compare a wide range of options to find a policy that is appropriate for your needs. That way, you’ll be able to weigh up the different benefits, inclusions and exclusions and other extras to find an offer you consider most suitable. However, this can be a significant time investment and it’s easy to miss great offers if you don’t know exactly where to look.
Alternatively, you can purchase a life insurance policy through Savvy. We can help you find a policy by comparing a range of offers from a panel of trusted life insurers all in one place. You can even have the paperwork involved in buying a policy handled for you when you purchase through us. The whole process, from comparing to buying, can be done online, so you can get started with a free quote through us today.
Life cover can pay a nominated beneficiary a lump sum if you’re diagnosed with a terminal illness or pass away. This type of insurance can provide your immediate family or another loved one some financial assistance to cover funerals, medical costs and day-to-day expenses.
If you’re injured or too sick to work for an extended period, income protection insurance is designed to help you focus on your recovery. You can be covered for up to 70% of your usual wage for a chosen period, such as five years or up to age 65, depending on the level of coverage you buy.
This type of insurance is designed to offer cover to those who are permanently disabled by injury or illness and are no longer able to work. You can choose to take out cover for an inability to work in your current job or in any role suited to your qualifications.
Trauma insurance is a type of policy which provides you with a lump sum payment in the event of a critical illness or major accident. The conditions eligible for claims will be outlined in your insurer's PDS, but can include cancer, heart disease, severe head trauma and cardiovascular disorders.
When compared to traditional life insurance, SMSF life insurance enables you to make your payments directly through your super, meaning you won’t have to go out of your way to do so from your bank account each month or year.
Getting life insurance through your SMSF can come with certain tax benefits. For instance, the premiums paid can be tax-deductible for the SMSF, which can lead to lower payable taxes on your contributions.
Borrowing money from your SMSF could mean your assets are taken and sold to recoup funds in the event you pass away or are no longer able to repay your debt. Life insurance can provide security that the loan debt can be covered should one of those events take place.
Because your premium payments are made directly from your super, you may have less to retire on by the time you’re ready to access your funds.
There are fewer options when it comes to types of coverage through SMSFs, so if you wanted to take out trauma cover, for instance, you wouldn’t be able to do so.
Because payouts are made to the fund, rather than your family, you’ll need to sort out how the money is to be distributed and find out how it might be taxed in line with your fund’s rules.
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Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.
Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.
For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.