SMSF TPD Insurance

Add TPD Insurance to your SMSF Life Insurance policy

Total and Permanent Disability (TPD) insurance is an optional element of our SMSF group life insurance plan. Each member of your SMSF can apply for up to $3,000,000 TPD cover under your policy, provided that they also take out at least $50,000 of death cover.

TPD is a 'living insurance', which protects you against the risk that you will be severely injured or become seriously ill at some stage during your life, leaving you unable to work. It provides a lump sum payment intended to replace your future earnings, cover medical costs and help you and your family adapt to your new circumstances. The money can be used for any purpose, including to pay off your mortgage or to invest for a steady future income.

For maximum flexibility we offer two options for the structure of your members' TPD insurance: within the SMSF, or as a separate, linked policy to be held outside of their superannuation.

Holding TPD cover within the SMSF optimises the tax benefits for your members, as they will usually be able claim tax deductions for the contributions they make to the fund to cover the cost of their premiums. Premiums for TPD insurance are not normally tax-deductible, so this can represent a considerable saving. There are, however, some considerations which your members should bear in mind:

  • The SMSF will be the beneficiary of any payment received as a result of a claim and will only be able to pass on these funds if the members satisfy the SMSF conditions of release. This could lead to delays in their ability to access the money at the time of their illness or injury, or even prevent them from being able to do so.

  • TPD cover held by your members within your SMSF will be linked their death cover. Any payment made under their TPD policy will reduce their remaining death benefits.

As part of our group life insurance plan, your members have the alternative to apply for their TPD insurance as standalone cover, to be held outside of the SMSF. They are still required to take out death cover within the SMSF to qualify for this. Choosing standalone cover offers fewer cost savings, but provides easier access to any claim proceeds and allows them to apply for an 'own occupation' cover which increases the likelihood of their being able to make a claim.

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