How to make your insurance more affordable

Did you know that you can save money by buying your insurance through your super? This?s thanks to superannuation offering both tax and cash flow benefits.

Most super funds offer insurance ? like life, total and permanent disability (TPD) and income protection insurance ? that can pay off your debts and replace your income should you be unable to.

While these types of insurance can also be bought outside of super, not only will you have to fund the premiums from your own pocket, but you may not get any tax breaks (when taking out life or TPD insurance).

Insuring through super

When insuring through super, the premiums are deducted directly from your super balance; this means that you can arrange the amount of required coverage without having to pay from your cash flow.

The downside of doing this is that you?ll use up some of your superannuation; while this may affect you when you?re no longer working, it?s important to think of what could happen to your family?s lifestyle before then if you don?t have the protection of insurance.

Help during hard financial times

If you or your family face financial difficulty, you could run out of savings very quickly; well before your intended retirement date. So, insuring through super could be a great solution if you don?t have enough cash flow to pay for non-super insurance premiums.

Tax benefits

Even if you think you could pay the non-super insurance premiums, there are still cost-effective benefits of insuring through super.

There are some tax benefits for making super contributions regardless of whether the contributions are used to buy insurance or investments.

For example, if you:

• are an employee and are eligible to make salary sacrifice contributions, you could buy insurance through a super fund with pre-tax dollars
• earn less than 10% of your income from employment (if, say, you?re self-employed or unemployed), you can probably claim your super contributions as a tax deduction
• earn less than $46,920 each year, of which at least 10% is from employment or a business, and you make personal after-tax super contributions, you may be eligible to receive a Government co-contribution of up to $500 in 2012/13. This could help you cover the cost of future insurance premiums.

More information

This document contains general information only. If you wish to rely on this information to determine your personal tax obligations, you should consult with a Registered Tax Agent.

In preparing this information, we didn?t take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you?ll need to consider (with or without the advice or assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances.

This information is based on our interpretation of relevant superannuation, social security and taxation laws as at 1 July 2013.

^? 2013 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686

Source: http://learn.nab.com.au/how-to-make-your-insurance-more-affordable/

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