For most of us, understanding how to protect ourselves, our families and our assets can be confusing. But it doesn’t need to be.
There are a number of strategies to help you reduce the effective cost of life insurance. These include:
Because everyone’s circumstances are different, the best way to ensure your insurance is as tax and cost-effective as possible is to speak to your financial adviser.
An extremely tax-effective way to save for your retirement, superannuation can also provide a good home for some types of life insurance – helping you reduce the effective cost of your premiums.
You hold your life insurance – usually death and total and permanent disability (TPD) cover – inside your super account, and use your super contributions to pay your premiums.
Instead of purchasing a stand-alone insurance policy, where premiums are paid for from your after-tax income, using your super contributions means you’re effectively paying your premiums using pre-tax money.
To find out more about insurance through super, talk to your adviser.
After a lifetime of working hard and accumulating your wealth, you will want to know that your estate is distributed according to your wishes. From providing funds for dependants, to ensuring the right people are looked after, life insurance can play a critical role in your estate planning affairs. This may include:
To discuss the role life insurance can play in protecting your estate, you should speak to your financial adviser. Alternatively, if you know what you want, you can either buy online or over the phone today.
Understanding how to protect ourselves, our employeres and our assets can be confusing. But it doesn't have to be. Here are some tips and strategies to make it easier.
If you’ve got any employees whose loss would leave a serious impact on the profitability of your business, you can take out a life insurance policy on those individuals.
If one of those key people then dies, your business will receive a lump sum payment to help you make the necessary changes to recover from their loss.
Just like you would typically take out life insurance to cover your mortgage and personal debts, business owners should also consider protecting any debts in the name of the business.
This can help ensure your business remains viable if you die or suffer a total and permanent disability – improving saleability, and helping protect your family from any financial consequences that may result.
Business expense insurance can be used to cover your fixed business expenses if you are totally or partially disabled.
This may include expenses like rent and lease payments, insurances, and wages for non income-producing employees – allowing you to keep your business running while you’re away from work.
If you’re in a business partnership, life insurance can be used to fund what’s known as a ‘buy sell’ arrangement. Say, for example, you own a business 50/50 with someone else. You might set up a buy sell arrangement that specifies that if one of you dies, the other will buy the other out to take full ownership of the business.
To fund this arrangement, the business takes out life insurance policies for each of you – with the sums insured equivalent to half the value of the business. If one of you then dies, the proceeds of the insurance policy are paid to the beneficiaries of the deceased – effectively cashing out their half of the business.
Full ownership of the business is then passed onto the surviving partner, without them having to find a large sum of money at short notice.
Insurance inside super can be a good way to make insurance more tax-effective, and more convenient, for you and your employees.