Insurance Via A SMSF – Advantages And Points To Note

Using a SMSF to put in place life and disability cover can be advantageous financially because you can use super savings rather than current cash to pay the premiums.

On the other hand, using a SMSF for trauma insurance is not recommended because that action is likely to breach the sole purpose test.

(Trauma insurance provides financial help in the event of a life-threatening disease.)

To avoid falling foul of the sole purpose test, any benefits from a trauma insurance policy would need to become part of the assets of the fund until the member can legally access them.

Of course, this could be many years in the future and would largely defeat the purpose of taking out trauma cover.