Do you need to review your insurance?

When a family experiences financial difficulty due to loss of income when an immediate family member becomes seriously injured or ill, it is an extra stress at an already difficult, busy and emotional time. This is why appropriate insurance cover is a key consideration in any financial plan.

Some types of insurance cover can be held within your superannuation fund, and some must be standalone insurance. Holding insurance within super may allow you to fund your insurance premiums tax effectively, reducing the effective cost of your insurance premiums.

Some people also like the convenience of using their superannuation to fund their premiums rather than affecting their own cashflow. However, you need to remember that this will reduce your superannuation benefit and consider how this impacts your retirement plan, and overall financial plan.

Other considerations

Some insurance within super will expire when you turn 65 or 70, depending on the cover.

You don’t want to be caught out if you are close to this age so it is sensible to review your insurance cover regularly with your financial adviser who can let you know when the plan needs to change.

What insurance can be held within super?

Not all types of insurance can be held within your superannuation fund. Generally, you can pay premiums for life, any occupation, total and permanent disability (TPD) and, income protection insurance through your superannuation fund.

Whilst this can be an effective way to manage your cashflow, you need to check the type of cover is appropriate for you and will provide you with enough cover for life events that you may need to claim for. You also need to be aware of any super balance and contribution requirements by legislation, to keep your insurance within super active.

Seek professional advice

A Financial Adviser can determine whether holding insurance inside superannuation is appropriate for you. They can work out what you need, what it will cost, and the most appropriate way to pay the premiums. They can set up regular review meetings with you to go through any changes in circumstances so that the plan can be tweaked accordingly.

Source: IOOF