Combining SMSF Life Insurance

It can often be cheaper and more efficient to buy your life insurance as a package from one insurer, for example using TPD cover to act as a catch-all for anything not covered by your trauma insurance.

An SMSF cannot generally pay premiums for an insurance policy unless it is the legal owner. While this is fine, even desirable, for some types of policies, other policies are best held outside of a SMSF so you can get easy access to your money if you have to make a claim.

How can I take advantage of policy bundling, but still get all the tax benefits of holding life insurance in my SMSF?

Some insurance companies offer opportunities to link policies together, with some policies held by the SMSF and others held direct by you. This flexible linking lets you take full advantage of any discounts or loyalty benefits the insurance company offers for having all your insurance cover in one place. You may even be able to link with policies which are held by your business.

Which policies should be held within my SMSF, and which should I hold direct?

You will need to get specific advice for your individual circumstances, but for many people this structure works well:

Type SMSF Individual Reason
Term Life  

Tax advantages make premiums cheaper

Tax advantages on distribution


Tax advantages make premiums cheaper

Benefits usually accessible

Income Protection  

Tax advantages make premiums cheaper

Benefits can be accessible

Trauma   Unrestricted access to benefits

How do I choose the right policies to hold through my SMSF?

A linked insurance package won't always be to your advantage. If you have specific needs, for example if you have a high-risk job, you may receive superior outcomes from a targeted stand-alone policy, even if this can't be bundled.

We recommend you seek guidance from your accountant or financial advisor on the most suitable way to structure your life insurance policies.

Our life insurance specialists can help you understand the different SMSF life insurance products on offer and compare terms, conditions and prices so you can choose policies that provide the type and level of cover you want.

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