Ownership of Insurance

Generally personal insurance can be purchased as an additional part of a person’s employer superannuation or can be purchased as a stand-alone policy.

For each type of Personal Insurance that is available, we have provided some things to think about when considering the ownership of the insurance. This is not an exhaustive list of considerations relating to ownership and professional advice should be sought prior to establishing personal insurance.

Life Insurance

Held in Employer Superannuation Fund

  • If you change employment, will your insurance cover continue to be provided at the same price and at the same terms without additional medical checks?
  • Benefits paid free of tax, providing benefit is paid to a ‘dependant beneficiary’ under Superannuation legislation. A spouse and children under 18 are generally considered to be ‘dependant beneficiaries’.
  • Benefits are generally paid at the discretion of the trustee of the superannuation fund, and not necessarily in accordance with their will. Most people assume that their superannuation is dealt with by their will. This is not necessarily the case. This may provide a conflict with the person’s will, particularly for those with children from different relationships and multiple marriages. 

Owned Jointly or Individually outside of superannuation

  • Generally these policies are “guaranteed renewable”, which means that once the insurance company accepts to insure the applicant, the insurance company guarantees that the policy will be renewed each year providing that premiums are paid irrespective of any changes in occupation, health or other activities.
  • Premiums for life insurance are generally not tax deductible, and claims are therefore paid out free of tax.
  • A policy that is owned jointly (as joint tenants) will result in a death claim being paid direct to the surviving policy owner, without passing through the estate.

 

 

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