Ownership

Life, TPD and income protection policies can be owned personally or through a superannuation fund. Trauma insurance can be owned personally.
 
When held within a superannuation fund, the policy is owned by the trustees usually for the benefit of the member.
 
When making a choice of how to own the policy you need to consider the advantages and disadvantages of each option. 
 
 

Inside Superannuation

In Personal Name

 

Advantages

 
1. Premiums are paid using contributions into the fund (e.g. employer contributions) or your superannuation savings – this can help to ease your cash flow.
 
2. Tax concessions on contributions may reduce the effective cost of the premiums (e.g. salary sacrifice to cover the cost of premiums)
 
3. In some funds you may be eligible for automatic acceptance (for some cover) which means you will not have to provide evidence of health or income
 
1. The claim proceeds are usually tax-free
 
2. Claim proceeds will be paid directly to you, your estate or nominated beneficiary as appropriate. This ensures the money is available when you and your family need it
 
3. A wider range of benefits and features may be available
 
4. Income protection premiums are generally tax deductible

 

Dis-Advantages

 
 
1. The policies may have less benefits and features than those offered outside superannuation due to legislation restrictions
 
2. There may be restrictions on the payment of benefits and the insurance proceeds could be locked inside superannuation in some disability/illness situations
 
3. Tax may be payable on claim proceeds, depending on circumstances and rules at the time
 
1. Your disposable income will be reduced as you need to pay premiums from your after-tax income
 
2. Premiums need to be paid from after-tax money and so may be a higher cost to you than premiums inside superannuation