Self-managed super funds are now the fastest growing part of the superannuation market in Australia, with more than one million of us being members of an SMSF.

SMSFs have become a popular way for Australians to build their retirement savings because they generally offer greater control and flexibility of your super investments.

And while thousands of new self-managed funds are being established every year, there are some technical areas that can ‘trip up’ the average SMSF super member.

According to David Moses of *Leed Financial Services, insurance can be one of the trickier aspects of SMSFs that members need to be aware of.

“As seems to happen regularly with superannuation laws, legislation changes can and do affect what people can and can’t do with their super savings.

“New insurance policy regulations were introduced in July 2014 to ensure greater consistency between SMSFs and regular super funds,” says David Moses.

“It’s now a little clearer as to what types of insurance can and can’t be purchased by SMSFs.”

Allowed within SMSFs Not allowed within SMSFs
Life insurance TPD – ‘own occupation’
TPD – ‘any occupation’ Trauma cover
Standard income protection Comprehensive income protection

And while Life, TPD (Any Occupation) and Standard Income Protection policies can be purchased by SMSFs as shown in the table, David Moses warns that this cover will have some restrictions compared to the same cover purchased outside super.

In the case of life insurance, for example, payouts from SMSFs can be subject to tax under certain circumstances, unlike policies outside super where payouts are generally tax-free.

“Insurance within SMSFs can be complicated where exceptions exist, so it’s worth exploring your personal situation with a financial adviser,” he says.


*Centro Financial Services Pty Ltd T/A Leed Financial Services ABN 88 101 406 884 is a corporate authorised representative (ASIC No 278162) of Millennium3 Financial Services Pty Ltd 61 094 529 987 Australian Financial Services Licensee – Licence number 244252 Unit 7/50 Borthwick Ave Queensland 4172.

The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without
taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to
your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.
From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact
our office to opt out.