Traditionally, Life insurance has been purchased either directly through an insurer, through a financial adviser (Advised Life Insurance), or as part of your superannuation.
However, there are downsides to owning insurance in super. You run the risk of not having the right type or level of cover, or possibly being under-insured. Life insurance in your superannuation fund may not be tailored to your particular needs and circumstances. As premiums are paid from your superannuation savings, your superannuation balance will reduce by the premium paid each year.
Reasons for owning Life insurance outside Super
Reasons for owning Life insurance inside super
What are the tax considerations?
This table summarises the tax treatment of insurance premiums and benefit payments inside and outside of super.
Premiums are tax-deductible, benefits are tax-free to dependants.* Benefits are taxed up to 31.5% to non-dependants.
Premiums may be tax-deductible. Benefits are taxed as part of super.
Premiums may be tax-deductible. Benefits are subject to income tax rates.
Note that the table is general information only. It is based on current taxation laws which may change. Before making decisions about taxation, speak with your accountant or adviser or visit the ATO website for further information.
You can purchase Life insurance directly through an insurer, such as NobleOak, without a ‘middle man’.
In truth, there are very few Life insurers that let you buy directly. Most Life insurers have long-established arrangements in place with third-party brands and advisers, which would create a conflict if they also sold policies directly.
Not so at NobleOak. Our intentions about selling directly to you and cutting out the middleman are understood by our partners. This means our premiums are lower and you get the same product features that you might otherwise expect through an adviser channel.
Why choose NobleOak?
NobleOak does not spend money on mass-market advertising and our products are fully underwritten, with no pre-existing condition exclusions. In most cases, our products are lower cost and more comprehensive than most direct Life insurances sold through third-party brands.
Many direct Life insurance products are sold through third-party brands, which require margins to cover the high costs of mass-market advertising. Also, many such direct products have limited features, lower maximum amounts of cover available and sometimes contain broad ‘pre-existing condition’ exclusions. See below for more.
You can purchase Life insurance through a financial adviser or broker. This cover is generally more comprehensive than Life insurance available directly, and many people benefit from good quality financial advice.
You may not have to pay for this advice directly, but a typical adviser will be paid around 110% of your first year premium and around 10% of each year’s premium after that by the Life insurer, which is normally factored into your premiums. See the table below for more. NobleOak is a strong supporter proposed industry reforms to ban this upfront commission structure.
Why choose NobleOak?
NobleOak products are fully underwritten and just as comprehensive as advised products. An important difference is that NobleOak insurance doesn’t have built-in adviser commissions, which reduces our premiums.
Advantages of Advised Life insurance
Disadvantages of Advised Life insurance
Many people have some Life and TPD insurance in their super fund through their employer. While this insurance is generally good value, automatic cover levels are generally not enough to meet your needs. There are also some important restrictions on claiming benefits. See the table below for more.
Generally only Life and TPD insurance, and sometimes basic Income Protection insurance, can be purchased in your super fund. Trauma insurance is not available within super.
Why choose NobleOak?
NobleOak products are also SMSF-compliant, so you can purchase our Life and TPD Insurance within an SMSF if required.
Advantages of Life insurance in superannuation
Disadvantages of Life insurance in superannuation