SMSF Life Insurance

Personal insurance refers to insurance policies you take out on yourself – your life and your ability to earn an income. It provides protection against events like sickness, injury and death that prevent you and your family from meeting your financial commitments and lifestyle requirements. Vogue Planners will assist with your life insurance requirements and ensure the right solution for your situation. Here you will find some basic information pertaining to insurance policies and why life insurance should be part of your financial plan.

Custom SMSF Life Insurance Solutions

There is no “one product or solution fits all” option when it comes to life insurance. Each person’s situation is unique and at Vogue Planners, we support you to accurately assess your needs. Once your needs are assessed, we present you with the options that meet your current and future financial goals. Remember, when you attain life insurance, you are investing in the future financial security for your family.

Types of SMSF Life Insurance Available

The most common forms of personal insurance are:

  • Life insurance;
  • Total and permanent disability insurance;
  • Trauma insurance, and
  • Income protection.

SMSF Life insurance

Life insurance, also referred to as term insurance and death cover, pays a lump sum if you die.  It protects your family if you are no longer around to support them.   While most people think that life insurance is only for the main income earner, the person who takes care of the family is also a large contributor to the home.

Provides a cash lump sum that can be used by your family to:

  • Cover costs such as funeral expenses and legal fees associated with the implementation of your Will.
  • Repay debts such as your home mortgage and personal loans.
  • Replace your income.  The lump sum can be invested and withdrawn as income.

Can be purchased either inside or outside of superannuation

Many super funds provide life insurance.  Your employer has an obligation to offer you a super fund that provides a minimum level of death cover.  You can choose to maintain this cover, increase it or opt out. Contact your super fund to check whether you have any insurance and whether it’s enough to meet the needs of you and your family.  Your super member statement will also show whether you have any insurance cover and how much the premiums are.

Tax treatment

Outside super

  • Life insurance premiums are generally not tax deductible, however the benefit payment is tax-free.

Inside super

  • Premiums are tax deductible for the super fund, but the benefit payment may be taxed depending on who receives it.

How much life cover should you have?

This will depend on the costs you want to cover, such as:

  • Funeral costs;
  • Living expenses for your family;
  • Debts to pay out, or ongoing loan repayments ;
  • Future education expenses.

You should also consider:

  • Whether your spouse will continue to work.
  • Funding the cost of a house keeper, childcare or a nanny.
  • Whether any assets will be sold, such as your car.
  • Whether you will downsize the family home.

We can help you work out an appropriate level of life cover to suit your needs.

Total and permanent disability (TPD)

Total and Permanent Disability Insurance (TPD) provides a lump sum payment if you suffer a disability before retirement and can’t work again, or can’t work in your usual occupation or chosen field of employment.   Payments under a TPD policy are generally not made until the insurer believes that you are unlikely to work again.  This usually occurs only after you have been unable to work for at least six months.

Provides a cash lump sum that can be used by your family to:

  • Repay debts such as your home mortgage and personal loans.
  • Replace your income.
  • Meet medical costs.
  • Meet the costs of a modified lifestyle, e.g. nurse or carer and home and car modification.

Can be purchased as an add on, or as a stand alone policy

You can buy TPD as an add-on to term life insurance, or as a standalone product. You can also get TPD as an extra benefit from your super fund or as part of a trauma insurance product.

There are different TPD definitions

You should consider which of the definitions best suit your particular situation. Own occupation: you will be entitled to claim if you are unable to return to your ‘own’ occupation. Any occupation: you will only be entitled to claim if you are unable to return to ‘any’ occupation you are reasonably suited to by education, training or experience.Note: ‘own occupation’ is more expensive than ‘any occupation’ TPD.

Tax treatment

Outside super

  • TPD premiums are not tax deductible; however the benefit payment is tax-free if paid to the injured person or their relative.

Inside super

  • Only the portion of a TPD insurance premium that provides disability super benefits to a member is tax deductible for the super fund.  The benefit payment you receive will be taxed as a lump-sum super benefit.

How much TPD cover should you have?

When considering how much cover you need, you should think about:

  • Your financial commitments, what are they and how long will they last.
  • Repaying your debts.
  • Allowing for an increase in your expenses to cover the cost of ongoing care.
  • A lump sum amount to help cover the cost of any home modifications.
  • Whether any assets will be sold to help pay for these expenses.

We can help you work out an amount of cover to meet your requirements.

Trauma insurance

Trauma (or critical illness) insurance provides a cash lump sum if you suffer a specified illness or injury (e.g. serious heart attack, stroke, cancer, kidney failure etc). Advances in medical treatment have increased the need for trauma insurance because of the improved chance of survival; although you are more likely to survive, you are also more likely to have big medical bills to pay.  Trauma insurance is a way to ensure you have funds available to seek medical treatment and take time off work to recuperate.

Provides a cash lump sum that can be used to:

  • Pay for immediate care.
  • Provide an income stream should you stop working.
  • Repay any debt, or fund the ongoing repayments.
  • Meet the costs of ongoing therapy, transportation and any adjustments to housing and lifestyle changes.

Stand alone policy or additional options

Trauma insurance is usually purchased as a stand alone policy, but can be purchased with additional options, such as a TPD benefit. Trauma insurance is generally not available through superannuation.

Tax treatment

Trauma benefits are free of tax and there are no restrictions on how you can use the payments.

How much trauma cover should you have?

This will depend on:

  • Your financial commitments, and how long will they last.
  • Whether you want to repay your debts in full, or provide funds to cover the repayments for a period of time.
  • The estimated cost of specialist medical care.
  • Whether any assets will be sold to help pay for expenses.
  • The amount of time you may need to take off work, and whether you will need additional money during this period.

We can help you work out an appropriate level of cover to suit your needs.

Income protection

Income protection insurance (also known as disability insurance or income replacement) provides a monthly payment stream to replace lost income if you are unable to work due to injury or sickness. It is designed to help you maintain a reasonable standard of living, while you are unable to continue earning your regular income. While income protection insurance is an important consideration for anyone who works and relies on an income, it is also important for self-employed people, small business owners or professionals whose business relies heavily on their ability to work.

Level of cover

  • Generally, the maximum allowable cover is 75% of your gross wage.
  • Some policies will provide cover greater than 75%, but any additional amount must usually be paid into your superannuation fund.

Benefit period

  • This is the maximum length of time that you can receive payments while you are not working.
  • You can select a benefit period from two years through to age 65.
  • The longer the benefit period, the higher the premium.

Waiting Period


  • This is the length of time between stopping work and when you can make a claim to start receiving payments.
  • You can select a waiting period of between 30 days and two years.
  • The shorter the waiting period, the higher the premium.

Inside or outside of

Income protection can be offered through your super fund or can be


purchased as a stand alone policy outside of super.

Occupation rating

  • The cost and availability of cover is directly related to your specific occupation.  Consideration will be given to any risks associated with your job and how much you work, whether you are part-time or casual.
  • Income protection is not available to people who are unemployed and may be paused if you go on some forms of extended leave, such as unpaid leave and maternity leave.
  • Your financial adviser can help you find an appropriate policy to cover your line of work.

Tax treatment

Income protection premiums are generally tax deductible, but the payments received are considered income and are subject to tax.

How much income protection cover should you have?

It is important to choose the right level of cover for you and your family’s needs.  You should think about:

  • Your financial commitments, what are they and how long will they last.
  • Whether your ongoing loan repayments to cover.
  • Whether you will need to fund childcare or housekeeping costs.
  • Whether your spouse will continue to work.
  • If you need the maximum level of cover, or if you have other financial resources to help cover expenses.

Why Life Insurance needs to be part of your financial strategy

If one thing is certain about life, it is that nothing is certain. Life can change in the matter of seconds, which is why it is important to have the life insurance coverage that you and your family need – for today and for the future. One of the most common myths about life insurance is that you do not need it if you are young or if you are single. Life insurance is often considered something that is only needed once a person gets married and starts a family, or is close to reaching the age of retirement. However, in the event that something does happen, it is important to make sure that enough life insurance is in place in order to have your final expenses paid, along with any outstanding debts that you may have. Everybody’s circumstances are different – however, insurance is important for everybody. Your need for insurance will change as you move through different stages of your life.  The amount of insurance you require will be influenced by your how much you earn, the change in cost of living, your assets, your liabilities, if you are married or in a de facto relationship, and the number of dependants you have – all of which may change depending on your life stage. Insurance involves the payment of a premium in exchange for cover.  You will only receive a benefit if you have a legitimate claim against the policy you have bought.

Seek Professional Advisement for Your Life Insurance Needs

A mistake that is often made when a person attains life insurance is that they either acquire too little or too much cover. While not having enough cover is more of a problem than having too much, it is always beneficial to seek advice when you plan on attaining life insurance so that you can ensure the right level of coverage based on your circumstances. Another advantage of seeking advice for your life insurance requirements is that a professional can assist in determining your current and future needs. The experienced team at Vogue Planners will discuss the different life insurance choices with you and provide you with options that will assist in providing yourself and your family’s financial security. We will work diligently to match you with the right policy. To speak with us directly regarding life insurance, contact us at your earliest convenience.