Ownership of TPD through superannuation

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.

Advantages

  • 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.

Disadvantages

  • 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.
The Dover Group