In my experience a lot of people acknowledge that income protection and life insurance are important, but many simply do not have the cash flow to pay for the premiums.  One option to get around this is to use Superannuation to fund the cost of insurance.

The Superannuation rules allow for insurance premiums to be paid from your superannuation funds and in fact many funds offer a level of cover as a standard feature. This is the answer for many people who would like life and income protection insurance, but simply can’t afford it.

Recent developments have seen you able to tailor your insurance cover to your needs, with the insurance provider suited to your situation and simply use a Super rollover to pay for the cover, without having to change your Superannuation fund. This has really opened the door to have both the appropriate Super and insurance without having the choice of one affect the other.

Paying premiums through super for life insurance and TPD also has the benefit of being tax deductable.

There are some consequences of having your cover through superannuation. Most notably the insurance cover must be in line with SIS act rules of release; these are stricter than most insurance policies for TPD and Income protection. There are also taxation issues, especially if the beneficiary is not a dependant according to the SIS act.

There are some options in relation the rules of release, where most insurance companies offer options to pay a percentage of the premium outside super in order to get all the benefits of the insurance policy and not be restricted by the SIS rules.

Although there are some added complexities with holding insurances inside super and having premiums paid with Superannuation funds, and advisor can help you understand these and tailor your cover to suit , and it in many cases will allow many to have the insurance cover they require, that otherwise would not be possible.