You can afford insurance

In 2010, a study by Lifewise found that 95% of families didn’t have adequate levels of insurance. One in five families are likely to be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work; The typical Australian family will need to cope on half or less of their income as a result of underinsurance.*

With so many families without adequate cover, unexpected financial pressures on top of a serious heath event can put significant strain at a very difficult time.

Understanding their finances are one of the main reasons Australians fail to protect themselves and their families. How can I afford the premiums? Here’s how.

Insurance cover through super

Did you know that you can pay your insurance premiums through your super? This may assist you with paying insurance premiums when you have a low disposable income.

Other ways to pay for cover

You can make contributions to your super fund and gain tax benefits:

  • If you’re eligible to salary sacrifice to super, you can have premiums paid from pre-tax dollars. And because your super fund may be able to claim a tax deduction for the premiums, you may not need to pay tax on the contributions.
  • If you’re self-employed, making a personal contribution to super from after-tax income to cover premiums lets you claim a personal tax deduction.

You could also:

  • take advantage of tax offsets of up to $540 by making a super contribution to your low-income spouse
  • make personal contributions to super, and if eligible, qualify for a Government co-contribution of up to $1,000.**

 Be aware – get the right advice

  • A benefit payment under superannuation is paid to the fund trustee. The trustee will only pay benefits to you or your beneficiaries if you meet a superannuation condition of release.
  • Tax on death benefits is determined by who receives the benefits. You may need to ensure a binding death nomination is in place so that benefits are paid to those intended.
  • Paying premiums from superannuation may erode your retirement funds so think about topping up your super fund when you’re able.

To take the first steps to getting the right cover for you call your financial adviser or Contact us today


This information was prepared by AIA Australia Limited (ABN 79 004 837 861 AFSL 230043), it is current at the date of this document and may be subject to change.  This information does not constitute financial, legal, medical or other advice and is provided for general informational purposes only, without taking into account your objectives, financial situation, needs or personal circumstances, and may not be exhaustive.  Please consult a financial adviser before making any decision in relation to any financial product.  While this information is believed to be accurate, AIA Australia expressly disclaims all liability for representations or warranties, expressed or implied, contained in, or for omissions from, this information.

[*]  Lifewise/ NATSEM underinsurance report 2010

[**] Eligibility for the co-contribution applies. The Federal Government has proposed to reduce this to a maximum co-contribution of $500 from 2012–13.

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