If you are comparing super funds or thinking about how you can pay your own life insurance, you might want to consider paying your insurance through your super fund.
Plus, it’s not just life cover/death cover that can be paid through super. Here are the three types of personal insurance you can choose to pay through your super:
- Life Cover/Death Cover
- TPD Insurance
- Income Protection Insurance
Let’s take a look at the pros and cons of paying for a type of insurance cover through your superannuation fund.
How to Pay Your Insurance Through Your Super Fund
For any insurance to be paid through your super fund, you need to contact your fund first or make the changes online. Here are the steps you need to take to pay your life insurance through your super fund:
Contact your super fund or visit your online super fund member portal and inform them of the changes you want to make. At this point, it will determine whether or not it can be paid through your super fund. If your insurance can be paid through your super fund, you will be given a choice as to how you want your fund to be paid.
You can choose to pay the premiums directly from your super fund account or you can choose to have the premiums deducted from your salary. Work with your super fund representative to decide which option is best for you.
If you choose to pay the premiums from your super fund account, you will need to provide a valid bank account or account number.
Benefits of Paying Insurance Through Super
There are many benefits of paying your insurance through your super fund.
Pro #1: It can be tax-effective. By paying your insurance through your super fund, the money you pay for your premiums is pre-tax. This means your insurance premiums are paid from your pre-tax income.
Pro #2: Your Insurance Premiums may be cheaper. By paying your insurance through your super fund, you may pay cheaper rates and be able to enjoy package discounts (with multiple types of insurance).
Pro #3: It can be easier. Having your insurance paid through your super fund can be a more simplified process and more convenient. Your personal details are already within your super fund, reducing the time spent on filling out a long form. It’s also paid for you on your behalf through your super, so you can have peace of mind knowing you’re covered.
Disadvantages of Paying Insurance Through Super
While there are many advantages of paying your insurance through super, there are also a few disadvantages.
Con #1: It can be more expensive. Being able to pay your insurance through your super fund may only be worthwhile if you have accumulated a large super fund. It’s important to compare insurance prices and get the best deal for you.
Con #2: This may reduce your retirement savings. Paying insurance through your super fund usually means the premiums and fees come out of your super balance. This can lower your nest egg for retirement so it’s important to ensure you have e large enough super fund (or are even making additional contributions for your future).
Con #3: Your level of cover might not be enough. You could be underinsured if you choose insurance through your super fund. Many super fund insurance policies are only basic and may not cover you and your family for what you actually need.
Make An Informed Decision About Your Finances with The Guidance From An Expert!
If you’re still unsure about whether or not you need insurance, you can seek financial advice in Hornsby through Hyland Financial Planning. We aim to help you reach your financial goals through strategic planning and unique solutions.
