Purchase insurance through your Super Fund and Save

You may be able to purchase life and total and permanent disability (TPD) insurance with before-tax dollars through your super fund, by using salary sacrifice. This will enable you to increase the amount you are covered for, for the same cost. If you purchase insurance through your super fund, the same tax concessions apply as when you invest in super.

George (age 45) has set aside $700 before tax to pay for life and TPD insurance. After tax, this amount is $409 (based on a tax rate of 41.5%). If George makes a salary sacrifice of $700 and then uses this money in his super fund to buy insurance, no tax will be payable. He'll effectively have increased his purchasing power for the same cost. Depending on your particular insurance policy, this could equal significant increases in the amount you are covered for, in some cases hundreds of thousands of dollars more.