SMSF Life Insurance pays a benefit to the SMSF (as the insurance owner) if the insured person dies or becomes totally and permanently disabled (if TPD cover was also applied for). That money is typically used to pay out the insured person’s death benefit lump sum, helping to protect the SMSF’s investment strategy for remaining members.

An SMSF allows up to four members to pool their resources in one super fund.

An SMSF is different from other super funds in that SMSF members are generally also the trustees of the fund. In practice, this means that SMSF members manage the fund themselves for their benefit, and must comply with all taxation and superannuation regulations.

Having an SMSF can be a good option if you want more control of how your retirement savings are invested. However, you also need to ensure you’re prepared to put the time and money into meeting your SMSF obligations.

The Australian Securities & Investments Commission (ASIC) outlines the importance of covering all the bases when setting up a SMSF.

Life Insurance and SMSFs

The Superannuation Industry (Supervision) Act stipulates that all trustees of SMSFs must actively consider the need for Life Insurance covering every SMSF member. This requires formal documentation in the fund’s minutes and must be reviewed on an annual basis.

There are potential benefits of buying Life Insurance through your SMSF, including:

• Affordability: You can pay your Life Insurance and TPD Insurance premiums from your SMSF fund, rather than out of your own pocket.
• Tax savings: Contributions to superannuation funds can be tax-deductible, encouraging members to increase their contribution levels.
• Tax-deductible premiums: Instead of claiming insurance premiums as an annual tax deduction, the Trustee of the SMSF may be able to claim a tax deduction on the insurance premiums paid by the fund which reduces tax paid on capital gains, investment earnings and other taxable contributions received.

Keeping up with SMSF rules

From 1 July 2017, a number of changes to the superannuation system were introduced to improve the ‘sustainability, flexibility and integrity’ of the Australian superannuation system.

NobleOak’s SMSF Life Insurance

SMSF Life Insurance is a simple and cost-effective way to provide for your family, and protect other SMSF members, if something happens to you.

Some of the key benefits of SMSF Life Insurance include:

High cover levels – You can apply for up to $15 million cover for Life Cover and terminal illness, and up to $5 million for Total and Permanent Disability (TPD) Insurance, without having to go through a financial adviser. That’s much higher than most direct insurers.

Low premiums – We don’t pay fees or commissions to advisers. That means lower premiums for you.

Fully underwritten cover – We take the time to get to know you upfront, so we can tailor your cover and premium. That gives you more certainty at claim time.

Please note that the information we provide is not advice but general information only.

There are potential benefits of buying Life Insurance through your SMSF.

For example, you can pay your premiums from the fund instead of out of your own pocket.

Your SMSF may be able to claim a tax deduction on the premiums which reduces tax paid on capital gains, investment earnings and other taxable contributions received.

NobleOak Premium Life Direct offers high levels of cover. You can apply for up to $15 million cover of Life Cover and up to $5 million of Total and Permanent Disability (TPD) cover, without having to go through a financial adviser.

In addition, NobleOak provides the unique flexibility to move your insurance out of SMSF without cancelling your plan.

This could be beneficial if your health deteriorates, your SMSF members’ requirements changes, or you no longer want to pay premiums out of your SMSF funds.