Free up your cash flow – insure through your super!

insurance concept

Personal insurance is necessary to protect your family’s future if the unexpected happens or tragedy strikes. But it’s also important to make sure you buy it in a tax-effective way.


Benefit from up-front tax concessions
If you buy personal insurances such as Life and/or Total and Permanent Disability (TPD) through your super fund, you may be able to take advantage of a range of ‘upfront’ tax concessions generally not available when insuring outside super.

For example:

• if you’re eligible to make salary sacrifice contributions, you may be able to buy insurance through a super fund using pre-tax dollars (read the case study below)
• if you earn less than 10% of your income from employment (e.g. you’re self-employed or not employed), you may be eligible to claim your super contributions as a tax deduction [1], and
• if you earn less than $50,454 pa, of which at least 10% is from employment or a business, and you make personal after-tax super contributions, you may be eligible to receive a Government co-contribution of up to $500 that could help you cover the cost of future insurance premiums. [1]
These concessions can make it cheaper to insure through a super fund, or help you get a level of cover that may not, otherwise, have been affordable. [2]


Case study
Jack, aged 44, is married to Claire, aged 41. Claire is taking a break from the workforce while she looks after their young children. Jack works full-time, earns a salary of $100,000 pa and they have a mortgage.
After assessing their goals and financial situation, their adviser recommends Jack take out $700,000 in Life & TPD insurance so Claire can pay off their debts and maintain the family’s financial position should he die or become totally or permanently disabled. The premium for this insurance is $1,0463 (in year one) outside super. [3]
Their adviser also explains it will be more cost-effective if he takes out the insurance through his MLC Wrap super account. This is because if he arranges with his employer to salary sacrifice the insurance premium into his super account, he’ll be able to pay the premiums with pre-tax dollars. [4]

On the other hand, if he purchases the cover outside super:
• he’ll need to pay the full premium of $1,046 from his after-tax salary, and
• he will also pay income tax of $669 (after taking into account his marginal rate of 39% ) on the part of his income required to fund the insurance premium. [5]

By insuring in super he could make a total effective saving of $669 on his first year’s premium.

MLC Table 3

Note: This case is for illustrative purposes only and has been prepared to highlight the importance of speaking to a financial adviser about the benefits of insuring in a super fund. It’s important that you don’t erode your super balance as a result of having premiums deducted from super. This can be prevented by ensuring sufficient contributions are made to cover premium deductions.
A financial adviser can also identify a range of other opportunities to make your insurance more cost-effective over the longer term.

More positives

Another benefit of insuring through your super account is you can have the premiums deducted from your super balance, without making additional contributions to cover the cost.
This can help you afford insurance if you don’t have sufficient cash flow to pay for it outside super. It may also free-up cash flow to help you take out other important insurances such as Critical Illness, which can generally only be purchased outside super.
Critical illness insurance may provide you with a lump sum payment to pay medical, rehabilitation and other expenses if you suffer one of a number of specified critical illnesses such as cancer, heart attack or stroke.

Protecting your income

Another type of insurance to consider is Income Protection, which can replace up to 75% of your income if you’re temporarily unable to work due to sickness or injury.
If you take out Income Protection insurance in a super fund, you can:
• make super contributions to fund the premiums and benefit from the range of upfront tax concessions, or
• arrange to have the premiums deducted from your existing account balance, without making additional contributions to cover the cost.

Alternatively, if you purchase the cover outside super, you can generally claim the premiums as a tax deduction. The best approach for you will depend on a range of factors, including the tax implications.

To find out more about the benefits of insuring through super, please contact Melbourne: 9654 0555, Geelong: 5229 0577 or Colac: 5232 1200

Note: Unless stated otherwise, this article does not take into account any of the measures announced in the 2016 Federal Budget that has a proposed date in future financial years.

1. Includes assessable income, reportable fringe benefits and reportable employer super contributions. Other conditions apply.
2. This will usually also be the case if the sum insured is increased to make a provision for any lump sum tax that may be payable on TPD and death benefits in certain circumstances.
3. This premium is for a 44-year old non-smoking male, is based on MLC’s Life cover Super standard premium rates as at February 2015 and includes the policy fee.
4. Because super funds generally receive a tax deduction for death and most disability premiums, no tax on contribution is generally deducted from salary sacrifice super contributions.
5. Applies in the 2015/2016 financial year and includes a Medicare levy of 2%. Calculation of pre-tax income required to fund insurance premium:
– A. Pre-tax part of income for funding premium = $1715
– B. Tax on A. is A. x marginal tax rate $1715 x 39% = $669
– C. Post tax part of income for funding premium A.-B.= $1715 – $669 = $1046

Save small. Win big.

Do you try to save more for your future but find life keeps getting in the way?

With almost half of Australians reportedly living pay-cheque to pay-cheque^, it seems many of us will struggle to put our saving plans into practice.

Building wealth doesn’t have to be complicated or mean making big sacrifices. Adding just $10 extra per week to your super could significantly boost your savings for the future. The more you can contribute, the more this effect is multiplied by compound interest as your savings grow.

Just look at the difference regular contributions could make to your super balance.

Could you spare $10 per week?

By contributing $10 per week (after tax), you could save*:
Period of investment (years) 10 20 30
Amount saved $6,102 $14,664 $26,680

How about $20?

By contributing $20 per week (after tax), you could save*:
Period of investment (years) 10 20 30
Amount saved $12,203 $29,328 $53,360


By contributing $50 per week (after tax), you could save*:
Period of investment (years) 10 20 30
Amount saved $30,508 $73,320 $133,401


By contributing $100 per week (after tax), you could save*:
Period of investment (years) 10 20 30
Amount saved $61,015 $146,641 $266,802

Whatever you can spare out of your weekly budget, it’s important to start saving sooner rather than later. Your future self will thank you.

Please contact us on (03) 5229 577 if you would like to discuss, or visit to find out more about our free information session, First Steps to Financial Success.

Important information

Information is current as at 14/09/2016 and may change. Forecasts are not guaranteed to occur.

Source: MLC 14th September, 2016

^ MLC & IPSOS, Australia today report, Feb 2016.


  • The weekly contribution is made as a single annual contribution (eg $10pw is made as a $520 contribution 1x pa).
  • The individual is eligible to contribute to super for each year of the entire period.
  • Individual makes after tax contributions (i.e. Non Concessional Contributions). [As such the amount contributed is the amount invested].
  • Investment returns are growth 4% pa, income 3% pa, franking credits nil.
  • Investments are still held at the end of the period.
  • Investment income is taxed at 15%.
  • Result is in today’s dollars.

Christmas is Coming! Here’s how to start budgeting.

Here are six ways to make Christmas easier on your back pocket:


1.    Make a list

Making a list might sound obvious, but Christmas shopping on impulse is dangerous. So make an old-fashioned shopping list and stick to it. Remember, shops spend a fortune on targeting your spending impulses – a list helps you beat them.

2.    Set a budget and track it

Use your list to create a realistic budget to help you avoid the mistakes of Christmases past. Look at where you overspent or what you didn’t plan for last year, and work out what your friends or family really need.

Then keep track of your spending to avoid going over budget – an app like ASIC MoneySmart’s TrackMySpend can help make this easy, or of course if you bank with NAB and have the Money Tracker this is always a crucial tool to your budgeting!

3.    Think outside the box

Try some gift hacks to reduce costs and double the fun.

Why not try a Secret Santa, so everyone gets just one gift? That way you can spend a little more than usual on your assigned person, and get them something they’ll really enjoy. And meanwhile, the whole family saves, reducing financial stress for everyone. Or you could agree to only buy for the kids in your family or group of friends.

For your kids, buy small gifts for Christmas Day, and give them an IOU for a larger gift to be bought in the post-Christmas sales.

Great gift giving doesn’t mean spending lots of money. For example, the kids can give vouchers for household chores or foot massages or even “best behavior” promise vouchers..

4.    Plastic isn’t always fantastic

If you use a credit card this year to pay for some or all of your Christmas gifts and expenses, track your spending and have a plan to pay it off.

If you spend $1,000 on your credit card, for example, and pay it back at $100 per month, it’s likely it will take you around 11 months to pay off [1].

5.    Cut Christmas Day food costs

Consider a simple classic meal, and don’t over-cater. Or if you’re the regular Christmas host, ask everyone to ‘bring a plate’ – or to bring a starter or dessert. Not only will it save money, it’ll also reduce the effort and make sure everyone can enjoy the festivities (including you!).

Buy pantry items for Christmas lunch in the weeks leading up to Christmas so you don’t have all the costs at once.

6.    Start saving now to spread the costs

How much did Christmas 2015 cost you? If, for example, you’re planning to spend $1,200 this Christmas, it’s a good idea to start saving now. If you save $50 a week over 12 weeks, you’ll have half of it already saved in time for Christmas!

Need some help with getting your budgeting together? Attend our free First Steps to Financial Success seminar in our Geelong office on Wednesday 26th October at 5:30pm, or call us on (03) 5229 0577 for more information.

[1] Based on an interest rate of 18%, at

Please note: The advice in this article is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

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