One major reason why many Australians don’t have adequate insurance is that it can be sometimes unaffordable. With more and more pressure on families and incomes to reach commitments, life insurance and income protection are usually the last thing we think about paying.

In recent times, the governement has somewhat softened it’s approach to superannuation and the use of it in regards to insurance policies. You are now able to pay your insurance from your superannuation account balance. There are a few rules asssociated with the fund manager, but a great way to fund your personal insurance, such as Life Insurance and Income Protection, is through your super fund.

There are some great benefits to this. Firstly, you can contribute to your super by salary sacrificing to cover the insurance payments, meaning that you are paying your premiums ‘Pre-Tax’. So depending on your tax rate, by paying through your super could save you up to 30% on your premiums!

Secondly, if you earn or declare less than $60,000 p.a as your taxable income, the governement will tip in $1 for $1 on a sliding scale up to $1,000 if you contribute after tax money into your super (after June 2010, this should increase to $1.50 for every $1 you contribute), so essentially, the government will pay your premiums for you! See here for the rules on the government’s Co-Contribution Scheme.

My third and final point is that if paying through your super fund and for some reason you are unable to meet your premium commitments, or simply wish to direct your income elsewhere (mortgage, investment, etc), you can easily stop paying your insurance and the cover will remain in place because the premiums are being paid form the account balance.

Obviously, if you were to keep the premiums being deducted from your account without paying into it, it will impact your end payout, but if a claim was to arise whilst you would normally have cancelled the cover, it goes without saying that it’s better to have something than nothing.

To enable you, or your clients to access this structure, at least a portion of super needs to be rolled into one of these providers. If there are super funds everywhere, we can assist in rounding them up into one place to save hassle aswell.

Please contact me below if you would like to talk about how I can help in Making your Life easier.

Paul Davies

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