Why appropriate insurance cover is a key consideration in any financial plan
When a family experiences financial difficulty due to loss of income when an immediate family member becomes seriously injured or ill, it’s an extra stress at an already difficult, busy and emotional time.
Some types of insurance cover can be held within your superannuation fund, and some must be standalone insurance. Holding insurance within super may allow you to fund your insurance premiums tax effectively, reducing the effective cost of your insurance premiums.
Some people also like the convenience of using their superannuation to fund their premiums rather than affecting their own cash flow. However, you need to remember that this will reduce your superannuation benefit and consider how this impacts your retirement plan, and overall financial plan.
Some insurance within super will expire when you turn 65 or 70, depending on the cover.
You don’t want to be caught out if you are close to this age so it is sensible to review your insurance cover regularly with your financial adviser who can let you know when the plan needs to change.
What super can be held within super?
Not all types of insurance can be held within your superannuation fund. Generally, you can pay premiums for life, any occupation, total and permanent disability (TPD) and, income protection insurance through your superannuation fund.
Whilst this can be an effective way to manage your cashflow, you need to check the type of cover is appropriate for you and will provide you with enough cover for life events that you may need to claim for. You also need to be aware of any super balance and contribution requirements by legislation, to keep your insurance within super active.
Seek professional advice
A Financial Adviser can determine whether holding insurance inside superannuation is appropriate for you. We can work out what you need, what it will cost and the most appropriate way to pay the premiums. We can set up regular review meetings with you to go through any changes in circumstances so that the plan can be tweaked accordingly.
Our financial advisers Bruno Tjelder and Damon Zischke and OBT Financial Planning Pty Ltd are Authorised Representatives of Lonsdale Financial Group Ltd ABN 76 006 637 225 | AFSL 246934.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial planner and seek tax advice from a registered tax agent. Information is current at the date of issue and may change. This information and certain references, where indicated, are taken from sources believed to be accurate and correct. To the extent permitted by the Law, Lonsdale, its representatives, officers and employees accept no liability for any person that relies upon the information contained herein. Information is current at the date of issue and may change.