I had no idea where my lost super was or the names of the funds. I just new it was scattered everywhere and I should definitely have more than $3,000 in my super. Australian Super Finder found all 7 of my funds and now my balance is almost $50,000. Thank you so much for getting my super back on track. ? Leonie, Thomastown VIC

Super Facts and Tips

Insurance through Super

That insurance is applicable in case anything unexpected happens. Deciding as to whether or not insurance arrangements must be stored within or outside of superannuation involves looking at the social security, benefits access and tax implications of every option.

In various cases, superannuation could be the best choice, not only in financing your insurance cover but also in ensuring that the proceeds are settled in the most efficient way when the right time comes.

A Case Study

Jake is 45 years and is earning $ 130,000 annually as a self-employed contractor. Jane, his wife, 46 years old, is presently not working and taking care of the children. They have decided that in Jake's death, they would require at least $550,000 in insurance coverage to satisfy their present debts. Using this example, the couple's income needs will be tackled using other investments. Jake's existing balance is $350,000 and contributes to the account through concessional of tax-deductible contributions, every time the cash flowing from his business allows it to.

We can compare the benefits of providing insurance cover within Jake's superannuation account to the stand-alone policies outside of super (also referred to as non-super policies). You will find out that although both have the same premium, there is more to be gained through super.

Financing the Premium through Super

Cash flow benefits can offer peace of mind. If the insurance is obtained through a super fund, trustees can pay for insurance premiums straight to the insurer through the person's account balance inside that fund. For Jake, this takes away the worry that, through his irregular business cash flow, there may be times when he can't obtain his premium payments.

Tax Effective Outcomes

Personal contributions and salary sacrifice contributions claimed as tax deductions will lure in an income tax of 15% of the fund. But to a degree the super contributions are utilized to pay the costs of the insurance premiums, a portion of the premiums could be tax-deductible towards the fund. Premiums for death coverage are commonly tax deductible inside super where the insurance's purpose is to pay for the benefits.

Premiums for TPD or Total and Permanent Disability, Income Cover and Disability Income Insurance inside superannuation could be partially or wholly deductible depending on the circumstance. Tax deductions may reduce the real costs for the member. But if the costs are kept with the Insurance-only division from the Macquarie Superannuation Plan, the deduction's tax effect will not be credited to a member's account where contributions for funding premiums are non-taxable. An example of this is when the individual or their spouse made a non-concessional contribution.

On the other side, premiums from personal insurance cover through a non-superannuation policy are usually paid along with after-tax dollars. Tax can apply to benefits paid inside super. Concessions can be made available for superannuation benefits paid because of death, TPD or terminal illness.

Want more information on super insurance? Go to www.australiansuperfinder.com.au

Loading PLease Wait..