Pay insurance premiums from your super fund – Why and Why not
Cashflow is obviously a large consideration when looking at things like insurance premiums.
Nobody likes paying insurance premiums, but everyone is thankful they did at claim time. How do we find a good balance in between those two events?
Do you have a super fund?
Do you wish you could use your super for something?
Well, did you know you can pay your insurance premiums from your super?
Why would you do this? Well, one major advantage is you conserve cashflow of course. By paying through your super fund, it is not impacting your personal cashflow each month because premiums are taken straight from your super fund instead!
The other good reason is that if you are on a marginal tax rate over the super fund rate of 15% (If you are full time employed, you will be), then the premiums you are paying are before tax payments, so you are actually saving a large portion by paying it prior to your tax being taken out first.
There is generally the other side of the coin. And insurance is no exception. The downsides are:
- By paying from your super fund, unless you top up the premiums that are being taken out, you could diminish your retirement savings considerably.
- The rules around super may restrict who is able to receive the benefit, depending on your need. For example, if you have a business partner you need to have covered, the super fund will not allow the benefits to be paid to them unless they are a ‘Dependent’ as defined in the super law. See HERE to read what that means.
So, are you sick of premiums impacting your cashflow each month? Click Here