Is life insurance tax deductible in super?

Is Life Insurance Tax Deductible in Super? By Chris Strano Super Guy http://www.superguy.com.au/is-life-insurance-tax-deductible/

Defining Life Insurances 3 MAIN TYPES OF INSURANCE IN SUPER Death Cover Total and Permanent Disability (TPD) Income Protection COLLECTIVELY REFERRED TO AS LIFE INSURANCES

Tax Deductibility Status Ability to claim a tax deduction for the premiums payable Tax deduction is a deduction to the superannuation fund (often passed through to member account) Not a tax deduction for the member, personally

What is an insurance premium? A premium is an amount payable, usually on an annual or monthly basis, to the insurance provider in exchange for the promise of receiving insurance benefits should you suffer an insurable event, as defined by the insurance policy in place.

Death Insurance Death cover generally provides the owner/beneficiary of a death insurance policy with a lump sum upon the death of the insured. Most commonly, this will be a lump sum paid to a husband or wife in the event their spouse was to pass away.

Death Insurance In most circumstance, the premiums payable for Death Cover will be tax deductible within your superannuation account.

TPD Insurance Total and Permanent Disability (TPD) Insurance generally provides a lump sum to the insured when they suffer a TPD event, as defined by the insurance policy.

TPD Insurance The deductibility of TPD insurance needs a little more explaining. However, I do not want to confuse the matter too much, as each individuals circumstances will differ. Basically, the portion of the premium relating to the core benefits of a TPD policy will generally be tax deductible.

TPD Insurance The portion of the premium relating to non-core or ancillary benefits (such as extras) will generally not be tax deductible. It needs to be determined what portion of the benefits of a TPD policy a trustee would be obligated to provide a disability superannuation benefit to a member and the scope of the insured event. Refer to Taxation Ruling TR 2012/6 for further information.

Income Protection Income Protection insurance provides a replacement income to the insured after a specific time period for a predetermined time frame, or until the insured is able to return to work. Partial benefits may continue to be received if the insured returns to work part-time. It is unusual for an Income Protection policy to provide a replacement income of greater than 80% of the insureds pre- illness/disability income, as they encourage and intend the insured to return to work in some capacity.

Income Protection Premiums are generally 100% tax deductible. Core benefits are generally accessible, provided cover is in accordance with your pre-disability income However accessibility to ancillary benefits may not be possible without meeting another condition of release. Maybe more beneficial to own in your personal name due to a higher effective tax benefit

Conclusion Type Premiums Deductible? Conditional Potential Accessibility Issues Life Yes No No TPD Yes Yes Yes Income Protection Yes No Yes

Is life insurance tax deductible in super?

Economy & Finance

lump sum

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replacement

permanent

tpd policy

ancillary

tpd insurance

tax deductible