You Can Afford Life Insurance
In 2010, a study by Lifewise found that 95% of families didn’t have adequate levels of insurance. One in five families are likely to be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work. The typical Australian family will need to cope on half or less of their income as a result of underinsurance.
With so many families without adequate cover, unexpected financial pressures on top of a serious heath event can put significant strain at a very difficult time. Understanding their finances are one of the main reasons Australians fail to protect themselves and their families.
How can I afford life insurance?
Here’s how … Did you know that you can pay your insurance premiums through your super? This may assist you with paying insurance premiums when you have a low disposable income.
Other ways to pay for cover
You can make contributions to your super fund and gain tax benefits:
- If you’re eligible to salary sacrifice to super, you can have premiums paid from pre-tax dollars. And because your super fund may be able to claim a tax deduction for the premiums, you may not need to pay tax on the contributions.
- If you’re self-employed, making a personal contribution to super from after-tax income to cover premiums lets you claim a personal tax deduction.
You could also:
- take advantage of tax offsets of up to $540 by making a super contribution to your low-income spouse;
- make personal contributions to super, and if eligible, qualify for a Government co-contribution of up to $500.
Be aware that …
- A benefit payment under superannuation is paid to the fund trustee. The trustee will only pay benefits to you or your beneficiaries if you meet a superannuation condition of release.
- Tax on death benefits is determined by who receives the benefits. You may need to ensure a binding death nomination is in place so that benefits are paid to those intended.
- Paying premiums from superannuation may erode your retirement funds so think about topping up your super fund when you’re able.
