A List of SMSF Life Insurance Benefits and Facts


SMSF life insurance

One of the biggest benefits you get from SMSF has very little to do with your retirement, and instead much to do with providing you with amazingly cost-effective cover benefits. In case of an unfortunate, early death – namely, before you retire, SMSF life insurance can certainly pay out. Even though the popularity of SMSF in Australia has been on the rise and there are many who’ve taken part, only a small portion of them considers this type of insurance, so in this article I’ll list some of the facts that go with it, which might help convince you, or someone you know, what you’re missing out on.

Competitive Insurance Cover

If you’re a member of an SMSF, and moreover you’ve joined the fund through an employer, then you’re very likely to have to get a highly competitive SMSF life insurance deal. The reason being is that you’ll be covered under the “group” policy deal instead of an individual policy which spreads the risk over a huge amount of people and generally means better rates.

Trustees Are Legally Required to Consider Life Insurance

Running an SMSF, you’re legally required to consider the life insurance need of all the members in your fund. This doesn’t mean you have to take out life insurance within your SMSF, but rather, you have to rethink your fund’s investment strategy.

Children First

Thinking about what happens if you die is a confronting, yet necessary exercise in case you have kids or other dependents as this urges for thinking about life insurance. You can nominate beneficiaries to ensure all the benefits from your SMSF go to them. Moreover, insurance payouts to dependents are tax-free under the tax laws.

Disability Insurance

SMSF life insurance usually comes in the same package as disability insurance, meaning your SMSF’s insurance policy also covers you if you become permanently disabled or incapacitated. This is also known as TPD or total and permanent insurance.

Automatic Default Cover

Many SMSFs provide their members with default insurance cover, or basic insurance cover. The deal is: you don’t have to undergo any medicals to get this cover, and you don’t have to pay high premiums for it when you suffer a pre-existing medical condition. This level of basic insurance usually isn’t a suitable one to look after your family in case you get sick or die, but at least it’s a start.

If you’re uncertain about anything, hiring an SMSF broker helps. They can assist you with tailoring the right insurance plan within your SMSF and ensure it meets all of your requirements. They can also go into more detail about passing down benefits to dependents vs non-depends, how they’re taxed, and give you all the info regarding other specific benefits one can get from certain circumstances.