A deductible boost to super savings

Contribution caps limit how much can be contributed into superannuation and constrain the ability to maximise superannuation savings, particularly for members over 65 years.  One method of significantly supplementing the superannuation benefits payable to dependents is through life insurance in a Self Managed Super Fund (SMSF).

Since the abolition of Reasonable Benefit Limits (RBL), insurance proceeds no longer take a deceased member over their RBL.  This makes insurance a cost effective investment to boost the death benefits payable to dependents on the death of a member.

Insurance can also be attractive for individuals aged over 65 who no longer meet the 'work test' to effectively increase a taxpayer's super entitlements.  This is of course subject to the cost of the insurance premium itself, which is generally based on the age and health of the insured amongst other criteria.

Also unlike policies held outside super, life insurance premiums are generally fully deductible to the fund's trustee.