Structuring cover in and out of super

When looking at your insurance cover within your SMSF, it is important to know what will and won’t be covered in case the unexpected happens.

There are three types of cover you can have within your SMSF: Life, Income Protection and Total and Permanent Disablement (TPD) – any occupation.

Each of these types of insurance have ‘conditions of release’ and the SMSF trustee decides if these conditions have been met and if so, how the money will be paid.

The types of cover available in your SMSF are:

  • 1. Life cover: A lump sum paid upon your death or for a terminal medical condition. If you are claiming for a terminal medical condition, two medical practitioners must certify that your illness or injury is likely to result in death within a year of the date of their certification. You do not have to stop working to be eligible for this payment.
  • 2. Income protection: A monthly payment for a specified period of time to cover your wages if you have had to temporarily stop working due to ill health or disability.
  • 3. TPD cover – any occupation: A lump sum paid if you are permanently disabled and because of that sickness or injury, unlikely to be working in any paid employment that you are qualified for by education, training or experience.

There are some other types of insurance to consider that are not available in your SMSF, which you can choose to include in your personal insurance cover. These are:

  • 1. TPD cover - own occupation: A lump sum paid if you are unable to return to your own occupation due to sickness or injury. For example, if you were a surgeon who lost your hand so you could no longer perform surgery, although you could still be paid for other medical work.
  • 2. Trauma cover: A lump sum paid if you are diagnosed with one of a pre-determined list of medical conditions. One of these, for example, would be if you were diagnosed with breast cancer.

Together with AIA Australia, AGI has launched the Self-managed Superfund Master Insurance Plan to provide SMSFs online access to insurance cover on death, income protection and TPD cover. Click here for more information.

Get a Quote and Apply Online

To obtain an Insurance Quote or to Apply Online with AIA Insurance click here.



AIA Australia Limited (ABN 79 004 837 861 AFSL 230043). Copyright December 2014.

Information is current at the date of this document and may be subject to change. This article provides general information only, without taking into account your personal circumstances. In deciding whether to acquire or continue to hold a financial product you should refer to the relevant Product Disclosure Statement.

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