Heading into the end of financial year, the sounds of EOFY sales and advice is ringing everywhere. But one thing that rarely gets publicised is that so many small business owners miss the opportunity to claim life insurance premiums as a tax deduction.

insurance premiums

Do you have life insurance? Does your partner (even non working spouse) have life cover?

Are you claiming those premiums as a tax deduction in super? If not, you are missing out on an easy tax deduction (and have probably received bad advice!)

The solution is easy. If you have an existing policy, regardless of the insurer. Simply look at your statement and see who the owner of the policy is. This will be in the top section of your statement. If it says ‘xyz super’, then it’s more than likely that you have the correct set up.

If not, you need to call your insurer and ask them how to change the ownership to super so you can claim the premiums as a deduction. Just note that some insurers (possible those offering general insurance as well), may not have the facility to change your ownership to super.

If this is the case, you need to consider getting advice. Generally, advice from a broker like Jarickson costs nothing, and the premiums are no more than that of other channels. So it’s worthwhile having a quick chat with a broker to get a second opinion, as there are a range of other issues that need to be addressed if the above is true.

Cashflow is something that we all grapple with as small business owners, and insurance premiums are usually a large part of the problem. It’s a necessary evil unfortunately. But there is a way to have your life cover in place without placing a strain on your cashflow.

As small business owners, superannuation is either something that doesn’t fit on the radar, or a Self managed super fund (SMSF) has been created to take advantage of certain rules as a business owner.

If preferred, you have the ability to pay your insurance premiums directly from your super fund, helping cashflow, and even attracting a 15% discount in many cases. This is where the value of a good broker comes into effect, so it’s important to speak to a Jarickson broker to help determine what would be suitable to you and your family, based on your personal needs and objectives.

(Disclaimer: This information is intended to provide general information only and the information has been prepared without taking into account any particular person’s objectives, financial situation or needs. Before acting on such information, you should consider the appropriateness of the information having regard to your personal objectives, financial situation or needs. In particular you should seek financial advice and you should read the relevant product disclosure statement (PDS) before making any decision about a product)