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10 Superannuation

Insurance inside superannuation

Many superannuation funds offer insurance options, including:

  • Life (or ‘Death’) cover;
  • Total & Permanent Disablement Insurance (TPD); and
  • Income Protection (or ‘Salary Continuance’) cover.

These insurances are explained in further detail in the Insurance Planning module.

A benefit of holding insurance within your super fund is that the premiums for these types of insurance may be deductible to the super fund, which means that the assessable income of your super account, which includes concessional contributions and income earnings (as previously outlined), can be reduced for tax purposes. As a result of the tax deductibility of the insurance premiums, the net cost of the premiums to the member will be reduced.

Note that income protection insurance is also deductible outside of super (i.e. it can be used to reduce your personal taxable income), so it is important to review the after tax costs and benefits of both options. Life cover and TPD insurance are generally not tax deductible if taken outside of super.

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