Life And TPD Insurance in superannuation - do you still need a separate insurance on top of your super insurance?

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  pao2x on 22/10/2014 - 16:10

  The default of the super insurance might not be adequate. Otherwise if you tailor it to your needs you do not need any other life insurance

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  stargalaxy on 22/10/2014 - 17:07

  -1

  Maybe not if you can increase the cover in your super fund, I am not sure if there is a max limit you can cover under super. If you are young, it is best to get maximum cover especially for TPD as accident do happen and you will need a lot of care. Also the advantage of being young is the premium is low even for high cover.

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  mskeggs on 22/10/2014 - 17:30

  +2

  Not sure I agree with the reasoning that getting max cover is sensible.
  After all, you must pay for it, and if you are young there are many other things you could spend on. Remember also that there is welfare support in addition to insurance should the worse happen.

  i suggest you seek cover for death/TPD that is appropriate for your stage in life. If you have a mortgage and a young family such a sum might be equal to paying off the house plus a little bit more. If you are single then you might want to consider having little cover, why pay money now for your heirs?
  I really reject the attitude of insurance salespeople (and financial advisers who earn a commission on these products) that you should buy insurance to give a lotto style payout if you have to claim.
  Insurance is to cushion a blow, not make you better off for having some misfortune!

  In any case, the real answer is you probably don't want insurance outside of super, as the premiums paid from within super are tax deductible. Contact your super fund to discuss setting the benefit at a level you are comfortable with.
  Remember to consider income protection insurance too. This covers you if you cannot work for a temporary period, but you will recover so TPD is not triggered. There are options for up to 2 years of payments or to age 65.

  • 

    malkakas on 22/10/2014 - 17:43

    +1

    premiums paid from within super are tax deductible

    Superannuation insurance premiums are NOT deductible
    https://www.ato.gov.au/Individuals/Income-and-deductions/Ded…

    • 

      mskeggs on 22/10/2014 - 19:21

      +2

      Sorry, I was imprecise. You do not claim them as a deduction, but they are paid from your super, which is concessionally taxed. You will have fewer dollars going to the taxman if you buy insurance via super than if you buy it with after tax dollars (your usual net pay).

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      Kevan2 on 22/10/2014 - 23:30

      Nice link malkakas, and like most legislation does not expand options and other consequences. Personally I would be uncomfortable to have Trauma Insurance in my Super. But then I would need to get personal advice that relates to my own needs, requirements, plans and current circumstances.

      This would also go taxation benefits whether direct, or indirect.

      • 

        malkakas on 23/10/2014 - 09:37

        I had to spend some time on ATO website lately as my Tax agent didn't claim the correct amounts of deductions from my income. I had to find individual items that I was eligible and let him know the exact amounts.

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  Kevan2 on 22/10/2014 - 17:56

  The Question you ask is more complex than many realise.

  Step 1. As mentioned above review your super cover. Ie Death, TPD and income protection.
  The fund you have has a good reputation.

  Step 1a. Know the rules of super, and of the fund. ie if the insurance rising, fixed or falling as may happen with defined benefits. Have you nominated beneficiaries, and how are they nominated. Unless nominated the right way the trustees may have the right to change distribution [in event of death.

  As mskeggs listed what is the Disability, TPD, Income protection coverage. If it is only for 24 months, what happens if you are ill and not able to work. What do they mean by work - any work [ dog poo collector ] or the important duties of your job whatever that means. After 24 months do you want to rely on partner, parents, family or human[erless] services.

  There may be taxation consideration of insurance to beneficiaries for super, or restrictions because of age. Is there pension required?

  step 2. What happen if you have a majour trauma event, I had a friends who had a stroke at 26, one at 32 lost legs [fell of train platform] and some heart attacks let alone cancer.
  This cover cannot be paid out of super.

  step 3. Insurance it not a lotto payment as msk…. said. But it is to ensure your position does not fall below what and where you are now. Yes cover home, protect income, protect those that are important to you.

  The Old Army question, 'so what?""" may help.
  and keep asking it. till you stop or feel uncomfortable, there be your starting point.

  Step 3 talk to 3 advisers, then hunt for policies [ensure you know what they don't do AS compaired to what you think they do,, and also where/when the underwriting done.Start or Claim?] Remember the adviser have to earn an income , yes its fair, you dont work for nothing, BUT THEY SHOULD DISCLOSE THEIR REMUNERATION POINTSECTS.

  GOOD LUCK. Last points, all insurances should do is put you and yours back in same position as if no sad event has had happened. {not check for spelling ran out of time, so forgive indiscretions} always get advice. hope you never have to use it.