If you own TPD through a superannuation fund, the costs of the premiums are borne by the fund. Typically, these premiums are tax deductible to the fund. Also, you can usually claim a tax benefit for contributions made into the fund to finance the premiums.
- Your day to day cash flow is not being used to finance the premium. This can make your current financial management easier.
- You can generally access an overall tax benefit by owning the policy through superannuation.
- The premiums may be lower if accessed through a group superannuation scheme.
- The premiums may reduce your eventual superannuation benefits, unless you make extra contributions to pay for them; and
- The rules of the super fund may make accessing the benefit more difficult.
When TPD is recommended to be held in a superannuation fund
- You do not have sufficient cash flow to cover the premiums;
- You wish to reduce the effective cost of the insurance by accessing a net tax benefit.