Cut the cost of life insurance

If you are self-employed, or you have a spouse who is on a low income, you can save on the cost of life insurance premiums by buying insurance cover through a superannuation fund rather than as a separate 'ordinary' policy. In some cases, this strategy can reduce your premiums by almost 50%.

Usually super funds will offer insurance to fund members against death as well as total and permanent disability (TPD). Some funds also provide additional insurance to protect against loss of income and temporary disability.

How does the strategy work?

The same tax deductions and rebates that apply to superannuation also apply to insurance purchased through a superannuation fund. If you're self-employed, you can claim a tax deduction on your super contributions, irrespective of whether the contribution is used to purchase investments or insurance.

Similarly, if you are making super contributions on behalf of a non-working or low income spouse, you may be able to claim a tax rebate of up to $540 p.a.

These tax benefits can make it significantly cheaper on an after-tax basis to insure through a super fund rather than through an ordinary insurance policy. All you need to do is nominate how your contributions are to be allocated between the superannuation fund and the insurance policy.

The Benefits

• The amount saved via deductions and rebates can be used to increase your level of insurance cover. • This strategy is ideal if you have a young family and you're looking for financial protection.