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A super way to insure

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Insurance can provide financial protection for you and your family, and insuring through super is simple, cost-effective and convenient.

Life insurance offers financial protection for your family and other dependants in the event of your death. It can cover expenses, such as home loan repayments, school fees, outstanding debts and other financial commitments. It can also provide your dependants with a lump sum payment.

Typically, many employees have life insurance through an employer-sponsored super plan. Some super plans also offer salary continuance, as well as total and permanent disablement insurance, making it a complete solution for your personal insurance needs.   

There are some great reasons why you should consider including your insurance within an employer-sponsored super plan:

  • Competitive rates: Choosing life insurance or salary continuance through an employer-sponsored super fund can be a great way to keep premiums competitively low.
  • Automatic acceptance: Most employer-sponsored super plans provide employees with automatic acceptance of insurance cover up to certain amounts without the need to provide health evidence.
  • Managing cash flow: Insurance premiums are deducted automatically from your super balance, so you can protect yourself and your family’s future without affecting your take-home pay and everyday cash flow.
  • Tax-effective: Contributions tax is not payable on the insurance premium portion of your super contributions. This means that, for employees, insurance premiums will generally be paid with pre-tax super contributions. Also, while life insurance premiums are generally not tax deductible for employees, the benefit payable upon death is generally free of tax (particularly where paid to a spouse or a dependent child).
  • Convenience: Many super plans offer life insurance, and some offer death and total disablement insurance, as well as salary continuance so you can manage your insurance needs in one place.

Do you need to consolidate your insurance cover?

It is estimated that many Australians have at least two super accounts. If you have more than one account, chances are you are paying multiple fees that could erode your retirement savings and you could be paying for insurance cover in each of these accounts.

When consolidating super accounts, your financial planner can help you make sure you have the right type and right amount of insurance cover, and can help determine if you could potentially encounter any barriers to consolidating your insurance cover.

For employees, there can be significant benefits to consolidating insurance cover in an employer-sponsored plan:

  • Making claims easier: Having insurance spread over more than one account increases the administrative effort for you or your loved ones if separate claims are required on your cover for each account.
  • Streamlined underwriting: Some super plans offer automatic acceptance up to a certain amount of cover when personal super accounts are being consolidated. Before consolidating your insurance within existing super accounts, check the amount of cover you can get through a streamlined underwriting process.

Speak with us today about how you could make the most of your insurance when consolidating your super.

What you need to know
Information current as at August 2011. This article contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances. If you decide to purchase or vary a financial product, your financial planner, our practice, AMP Financial Planning and other companies within the AMP Group will receive fees and other benefits, which will be a percentage of the premium you pay and/or the advice fee you agree with us. Some of the information in this article is based on our interpretation of the law. It is a summary of the subject matter covered and is not intended to be tax advice. No reader should act on the basis of this article without obtaining specific professional advice. Further details are available from your planner or AMP Financial Planning Pty Limited, telephone 1300 157 173.

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Greg Healey (ABN 40 903 379 148) trading as Explore Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706
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