How can I use pre-tax dollars to take out insurance through super?
Having an appropriate level of insurance cover is a way of safeguarding your financial security in case of sickness, injury or death. For some, funding your insurance cover via super may be a viable option becuase it can be tax effective and cheaper than holding such cover outside super.
How it works
Instead of paying for your insurance cover using your take-home pay, you can fund your insurance cover using your super balance or your regular super contributions (such as Super Guarantee or salary sacrifice contributions). Insurance via super can be tax-effective because the fund receives a deduction for the insurance premium which is generally passed back to your account.
Using salary sacrifice can be more tax-effective than using your after-tax wages, because you reduce the amount of your taxable income and the fund receives a deduction for the insurance premium so you effectively pay no tax on the value of the premium.
While buying insurance through super may have some benefits, it may not be the best insurance solution for your needs. You should talk to your financial adviser about the pros and cons of buying insurance through super.
Learn more about Tax
- How is my super taxed?
- How is super tax-effective?
- How can I use pre-tax dollars to take out insurance through super?
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