5 ways to smarter insurance

Did you know there are some smart ways to pay premiums so you make significant savings in the long term? Here are some ways to make your insurance more affordable:

1. Buy your insurance in super

Did you know that buying insurance through super can be cheaper than buying it outside super?

The same up-front tax benefits you get when you invest in super generally apply when you buy life and total and permanent disability (TPD) insurance through your super fund.

Also, it could be possible to have the premiums deducted from your super account balance, without making contributions to cover the cost from your existing cashflow or savings.

2. Get the premium structure that's right for you

Whether you buy your insurance inside or outside super, it pays to select the premium structure that best suits your needs.

There are a few options to choose from:

  • A stepped premium that’s calculated each year in line with your age:  With this, you would pay less upfront when you first take out the policy, but your premiums would increase each year as you get older.
  • A level premium that’s calculated on your age and the benefit amount chosen when the insurance started: 
    Although you might pay a bit more upfront than with stepped premium, your premiums will only change if you’ve selected CPI increases or if we change the policy fees or base premium rates.[1]
  • A blend of both 
    You can always switch from stepped to level premium or vice versa, depending on what suits you in the stage of life you’re at.
  • For example, as you build up assets over time and potentially need less insurance, you could reduce your level of cover on stepped premiums.
  • Or, if you could switch to level premiums at a later stage to minimise premium increases as you get older. The level premium would be based on your age when you switch.
  • Economiser
    With this option, your premiums would stay the same, even as you get older, however the level of protection you have would decrease.

3. Make savings on income protection insurance

When buying Income Protection, you can make it more budget-friendly by choosing a longer waiting period for your benefit payment or a shorter benefit payment period to significantly reduce your premiums.

4. Claim premiums as a tax deduction

Another option is to purchase Income Protection insurance outside super, where you’ll have to pay the premiums from your own pocket, but can generally claim the premiums as a tax deduction.

5. Consolidate your insurances

If you and your family hold a few different types of insurance, savings can also be made by consolidating the insurances into one policy – this will help reduce fees.

For more practical solutions that protect your family and maintain your cashflow, contact Stevens Roberts Financial Planning today.

Important information:

[1] Any increases to your benefit amount, including inflation linked increases, are based on your age at the time of the increase.

 

Stevens Roberts Financial Planning ABN 63 277 397 276 are Authorised Representatives of Meritum Financial Group Pty Ltd ABN 93 106 888 215 AFS Licence 245569. Registered Office at 105 – 153 Miller Street, North Sydney NSW 2060 and a member of the National Australia group of companies.

This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax and/or legal advice prior to acting on this information. The material contained in this newsletter is based on information received in good faith from sources within the market, and on our understanding of legislation and Government press releases at the date of publication, which are believed to be reliable and accurate. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this email.