Life insurance is often seen as an extra drain on monthly outgoings, but it doesn’t need to be. There are a number of options available that mean it is possible to have the right level of cover that does not impact directly on your cash flow.
It is now possible for the vast majority of Australians to have their life cover owned by a super fund. This form of ownership means the premiums are treated as a contribution.
This topic is complex and crucial to ensuring that your cover is structured correctly for your situation. It is important that advice is sought so as to fully understand the most effective option for you as an individual.
Insurance company superfund.
Most Insurance companies have a compliant superannuation fund that enables you to make a contribution that will pay for your life insurance premium. You may be able to rollover from your current fund, leaving no impact on your cash-flow or you may be able to get your employer to pay (if they agree).
Co - Contribution:
Depending on how much you earn the government co-contributes a specific amount into your super fund. In some cases this can be more than the insurance has cost you. The maximum co- contribution at the time of publication is 150% of your payment, to a maximum of $1500, meaning a $1000 premium will generate a $1500 Superannuation contribution, for those who qualify.
Spouse contribution:
By paying for your husband or wife’s life policy you could be eligible for a tax rebate from the government of 18% of the premium (up to $540).
Salary Sacrifice:
Your employer must agree but it may be a smart move to pay for your life insurance from your gross earnings. Like a normal Superannuation contribution, you can salary sacrifice into most insurers funds to pay for your life cover. You can arrange this directly through your employer and the premiums will reduce your income tax liability.
