Superannuation and life insurance are similar in that they both provide for you financially when you may not be able to provide for yourself.
How it Works
The law requires that as part of its Investment Strategy, all SMSF Trustees must consider whether the SMSF should hold a contract of Insurance that provides Insurance cover for one or more of its members. When you become a client of ESUPERFUND, your SMSF is permitted to arrange Insurance for its Members. To simplify the process ESUPERFUND has established a direct arrangement with AIA Australia (a product administered by Australian Group Insurances Pty Ltd "AGI") allowing clients to apply for Insurance online. You may also choose to use your own insurer. To learn more about AIA Australia, click here.
How does insurance within your SMSF work?
Members may obtain Insurance through their SMSFs.
1. The Insurance Premiums are paid for by the SMSF, rather than, for example, the Member having to pay for them out of their own personal financial resources outside super.
2. The Insurance Premiums are tax deductible to the SMSF. Note that Life Insurance and Total & Permanent Disability Insurance premiums are not tax deductible in your personal name, but they are tax deductible if the policies are held in your SMSF. Income Protection Insurance is tax deductible in both your own name and in your SMSF.
Owner of the Insurance Policy
SMSF members cannot hold Insurance in their personal names, then make the Insurance Premium payments from their SMSF Bank Account. In order for the SMSF to pay for Insurance Premiums, the Insurance Policy Owner must be in the name of SMSF with a specified Member named as the Insured person.
Cannot obtain an equivalent Policy in your SMSF to that held in your individual name
If you have an Individual Insurance Policy (that is, held in your own name and not in a super fund) and want this to be held by your SMSF under a similar policy, you must cancel the existing policy and arrange for a new policy in the name of the SMSF to be implemented. Before you do so, you must obtain advice about the risks and benefits of doing so. This can be important for a number of reasons, including if a member has developed an illness since obtaining the insurance policy: they may not be able to get a new policy. If a member does want to take out a new policy they can contact their insurer or you can do this through the AIA Online Insurance Application here
Accessing Information by ESUPERFUND
Data for all SMSF Insurance Policies established directly through ESUPERFUND are electronically accessible by ESUPERFUND.
No Advice
The ESUPERFUND Insurance Service is provided on No Advice Basis. Clients will need to determine if the AIA Insurance Product is appropriate for their financial situation based on their particular needs.
Insurance Service Not Compulsory
The ESUPERFUND AIA Insurance Product is provided to simplify the Insurance Application Process. It is not compulsory to use the ESUPERFUND AIA Insurance Product and clients can implement Insurance with any Insurer they choose if preferred.
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