Life Cover for SMSF FAQsFrequently Asked Questions

A Self-Managed Super Fund (SMSF) is a private superannuation fund that members can manage themselves, giving them control over how their super is invested. SMSFs can have between one and six members. Learn more about life insurance for SMSF.

Life insurance for SMSF is a lot like other life insurance products, but the policy is owned by the fund instead of an individual. While there are obvious similarities between life insurance for SMSF and everyday life insurance, there are a few key differences that you should familiarise yourself with before taking out cover.

Insurance premiums are generally tax deductible when life insurance is held in a self-managed super fund, however, always check with your financial advisor.

There are a few important things to be aware of, when choosing the cover that is right for you. Life insurance through super may have general exclusions, and insurance premiums are paid from the fund which means that they can affect your retirement balance. Tax may be also payable on Life and TPD benefits under super. As well as this, life insurance through SMSF typically only covers core benefits, with ancillary benefits such as advance funeral payments being unavailable. Take these factors into account when selecting the best option for your needs.

Yes, any SMSF can take out cover. To make payments, the fund must be the legal owner of the policy – which means the fund also owns any benefit that is paid. Premium payments are taken from the balance of the fund, instead of your post-tax income. Learn more about life insurance for SMSF.

One of the main benefits of taking out life insurance through your SMSF is that super fund premiums can be tax deductible (check with your financial advisor). And unlike cover through regular superannuation, SMSF life insurance can be tailored to the individual needs of each member.

Life insurance through your SMSF is typically limited to Life, Total Permanent Disability and Income Protection Insurance.

SMSFs can’t make life insurance payments unless they are the legal owner of the policy, which means they also control the distribution of any benefit payments. Having the correct ownership structure and trust deed in place is critical, so members can have a say in who receives any payments. You can’t transfer existing insurance into your SMSF, so you’ll need to set up a new policy to replace it, which could mean cover will be more expensive or certain medical conditions could be excluded if your condition has changed since taking out your original policy. Tax implications of buying life insurance through your SMSF will vary depending on individual circumstances, so always seek advice from your financial advisor before making any change.

Yes, but while this means the premiums won’t have to come out of your post-tax income, the payments will come out of the funds in the SMSF and will reduce the overall balance.

Any Australian resident between the ages of 18 and 64 with a Self-Managed Super Fund can apply for Real Life Cover for SMSF. After designating the SMSF as the owner of your policy, the fund trustees will be provided with the relevant documentation outlining the policy details. Quotes can be calculated separately for each member, with a separate application for each. Premiums will then be paid from the SMSF bank account, and a tax deduction could be claimed. To get started, request a quote online, or give us a call on 1300 030 714 to speak with one of our life insurance agents. We’re more than happy to answer any questions you might have and assist with your application. Learn more about life insurance for SMSF.

It is possible to have more than one insurance policy, depending on how much cover the different policies offer. Your age, income, assets and liabilities will generally dictate how many policies and how much cover you can have as well as any product limits that may be applicable.

In Australia, it is not compulsory to take out life insurance through your superannuation fund, and some people choose not to. It is possible to choose to not have life insurance at all, or to select a level of cover that is appropriate for you, or even to have life insurance outside of your superannuation. Some people elect to have a separate life insurance policy to supplement the life insurance available through their super policy, to meet the needs of their personal circumstances.

SMSF trustees are not required by law to take out life insurance cover for members, but they do need to think about whether it is appropriate to their circumstances. In many cases, members will maintain life insurance outside the SMSF, however there may be benefits to holding the insurance inside the fund.