{"id":217,"date":"2019-02-12T17:00:18","date_gmt":"2019-02-12T07:00:18","guid":{"rendered":"https:\/\/bantacs.com.au\/Jblog\/?p=217"},"modified":"2019-02-26T16:27:13","modified_gmt":"2019-02-26T06:27:13","slug":"income-insurance","status":"publish","type":"post","link":"https:\/\/www.bantacs.com.au\/Jblog\/income-insurance\/","title":{"rendered":"Income Insurance"},"content":{"rendered":"
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Must Knows About Income Insurance<\/strong><\/h2>\n

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Yeah, yeah I know no one wants to talk about insurance and possible disasters but odds are you already have income insurance as part of your superannuation.\u00a0 So, I am not talking you into taking out insurance here I am talking about paying premiums that may not provide you with the cover you think you have.\u00a0 Yes, this blog is all about saving your money not spending it!\u00a0\u00a0 Better now?\u00a0 I hope so because I need your considerable attention here to fix the problem.\u00a0\u00a0Download pdf<\/a><\/p>\n

Tax:<\/strong><\/h2>\n

Income insurance is tax deductible in your personal tax return if you pay it direct or tax deductible to your superannuation fund if they pay it.\u00a0\u00a0 As contributions to your superannuation fund are effectively tax deductible it is the same outcome tax wise.<\/p>\n

The point here is there is no tax advantage in paying your income insurance premium through your superannuation.<\/p>\n

There is a downside for people wanting to max out their $25,000 contributions cap. Don\u2019t waste it on income insurance premiums. Put the full amount into superannuation, pay the income insurance premiums out of your own pocket and claim a further tax deduction for them in your personal tax return.<\/p>\n

In short from a tax point of view it makes no difference whether the premiums are paid by the superannuation fund or out of your pocket unless you are pushing the upper end of your $25,000 superannuation contributions cap.\u00a0 In this case it is better to have your income insurance policy outside of super.<\/p>\n

Making a Claim:<\/strong><\/h2>\n

Now this is where the benefit of paying the premiums out of your own pocket really kick in.\u00a0 You see, if the superannuation fund owns the policy then the insurance company pays the superannuation fund.\u00a0 Then you have to get that money out of the superannuation fund.\u00a0 This is easy enough if you have reached retirement age or are permanently disabled.\u00a0 But if you have just broken your leg and can\u2019t work for a year then you can\u2019t meet the normal conditions of release to get that payout out of your superannuation fund.\u00a0 You will have to throw yourself at the mercy of the hardship provisions.\u00a0 For example, being on sickness benefits with bills that are overdue and you can\u2019t pay.\u00a0 Yet you thought you paid for income insurance to make sure you never sunk that low.<\/p>\n

Best of Both Worlds:<\/strong><\/h2>\n

You can get split policies where the effectively, 2 policies run side by side. One is inside Super, the other outside. The idea is that if your claim inside Super is rejected, then there is another Policy outside Super that you own .The majority of the premium cost is still borne by the Super fund. This means that the Super fund Trustee has no say over what happens during the claims process.<\/p>\n

This is still not the most effective policy if you are trying to maximise your $25,000 cap but if you need to utilise your employer\u2019s superannuation guarantee payment to help you meet your premiums then this is ideal.<\/p>\n

Checklist of What to Look For:<\/strong><\/h2>\n

Of course holding your income insurance policy outside of superannuation is going to allow you more options.\u00a0 Most superannuation funds have their own standard policy.\u00a0 Though if you are in an industry fund it may be competitive on price.\u00a0 If your occupation is risky it may also be the only option you have.<\/p>\n

Nevertheless, I want to encourage you to be proactive about your income insurance so here are the questions you should be asking:<\/p>\n