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

Payment of the Proceeds in Super Benefits

While contributing to insurance through super has significant benefits when it comes to cash flow, cost savings and convenience, clients must also reconsider the tax prescription of these insurance proceeds as disability or death happens along with other problems.

A Case Study for Death

For Gloria and Andrew, the situation is not complicated. Andrew has been a member of a super fund that enables him to opt for various death benefit nominations. His non-lapsing death benefit nomination specifies that Gloria will receive such benefit. After his death, Gloria will get a total amount of $90,000 composing his account balance of $350,000 along with an amount of $550,000 for insurance proceeds.

Gloria is a dependent of tax and super legislation, so she can get the whole amount as a lump sum with no tax in the same way as she would with a traditional non-superannuation insurance policy. Alternately, she may obtain the death benefit from the super fund within an account-based pension with its taxable part attracting a 15% offset or completely tax-free depending on the age. Arguably, if the lump sum was paid to somebody who is not a dependent, an untaxed element may be included which is usually 30% along with the Medicare levy, while a tax component is 15% along with the Medicare levy.

Child Pension
In Andrew's circumstances, since he belongs to a fund that provides child pensions and non-lapsing nominations, Andrew can have part of his entire benefit paid as an account-based pension to his children. Child pensions are not only tax-effective planning tools, but they are also simple but efficient means of controlling and managing the distribution of super savings among the beneficiaries.

Total and Permanent Disablement

Tax treatment for Total and Permanent Disablement or TPD benefits will depend on upon the member's age. Tax concessions can be applicable provided that the conditions are met. The likelihood for insurance proceeds to be released will depend on the preservation rules and subject to the terms of the cover, and there's a risk that benefits will be trapped inside the fund until the condition of release is being met.

Since July 1, 2014, super regulations have been requiring the alignment of the insurances definitions within superannuation along with the super law payment rules such the insurance monies can be made available to fund members once they claim it. Coverage held of fund members that are set before July 1, 2014, won't be affected.

If you still have more inquiries about super, donít hesitate to consult our experts at 1300 252 167

Loading PLease Wait..