5 tips on holding Life Insurance through your SMSF

 

 

Holding your Life Insurance through your Self-Managed Super Fund can be an effective method to secure the future of yourself and your loved ones. The following tips may help:

 

1. Considering Life Insurance within your SMSF is actually a requirement by the ATO
Findings from the government’s Cooper review revealed that only 13% of self-managed super funds actually held any form of Life insurance. In response to this underinsurance gap the ATO made it a requirement for all trustees to at least consider life insurance in their strategy document or meeting minutes. This does not mean that trustees are required by law to hold life insurance within their SMSF, it does however mean to be compliant with the ATO, it must be documented that consideration was given to life insurance within the fund.

 

How we can help: We can provide you with the right information to pass onto your SMSF accountant in order to ensure your SMSF remains compliant in this area.

 

2. Cash Flow Benefits
Since your SMSF owns the policy, it will fund the premiums. This can free up your cash flow, especially for times when money is tight or when you have more pressing financial priorities. It can be beneficial however to implement a contributions plan in order to avoid the eroding effect insurance premiums can have on your retirement savings.

 

How we can help: We can assist you in either transferring your current policy into your SMSF or advise on an alternative policy to undertake should this be appropriate for your situation.

 

3. Tax Efficiency
Tax savings can be achieved by funding your insurance premiums via pre-tax dollars through salary sacrifice and personal tax-deductible super contribution strategies. This effect is magnified for those in the higher tax brackets in reducing taxable income.

 

How we can help: We can provide you with specialist advice as to a contribution plan to avoid retirement savings erosion and to reduce taxable income.

 

4. Protect your assets within your SMSF
Life insurance within your SMSF can help avoid the sale of valuable assets such as property should something happen to a member. Not having the right insurance in place could have a major effect on the liquidity of the SMSF, as the death or TPD of a member is unpredictable and the consequences could be damaging to the other members.

 

How we can help: we can provide you with a review of your current cover and make recommendations based on your needs to cover any risk in this area.

 

5. Protecting Members
The underlying motive behind the requirement for members to consider Life Insurance in their SMSF’s is to prevent members from being underinsured. Putting in place the right amount of cover for your situation can help protect yourself and your loved ones from financial strain should something tragic happen.

 

How we can help: If you don’t know how much cover you need let us provide you with recommendations for appropriate levels of cover so that your financial future cannot be hindered by a devastating injury or illness.

 

 

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.

Judging investment performance


We all have different attitudes to investing. Some people are conservative and don’t like any variability in returns. Others accept the roller coaster of the share market as a short-term price to pay for better long-term performance. Some people will have both of these attitudes – conservative with their short-term savings and aggressive with their long-term investments.

 

It is probably unfortunate that the short-term performance of long-term investments is reported so often. The media often makes announcements such as “super funds balances boomed last month” or “share investors go backwards in one day”. Returns over short periods are probably irrelevant to a long-term investor.

 

But this reporting does shape the way people think about their investments particularly where shares are involved. You can expect shares to fluctuate in value over the short term but perform well over complete economic cycles.

 

There is a theory that when investors hear about these short-term returns they react in three different ways. Obviously, reactions depend on the most recent investment performance, but these are the most commonly made judgements (they might be familiar to you):

 

“I could have done better in the bank”

 

There will be times when growth assets under-perform term deposits. A lot of investors have thought this in recent years. As we are now witnessing with low interest rates, this is not true at the moment.

 

“I missed out”

 

There will be times when shares and property surge and someone you know will tell you they achieved 50% or 100% returns. The Australian residential property market was like this in 2002 and 2003 and the share market was similar between March and September 2009. Don’t worry, that time will come again so get in and stay in.

 

“I’m going backwards”
There will be times when shares produce negative returns. However history has proven time and again that sound share investment sees you “going forwards” over the long term.

 

Trying to achieve above-average returns at all times throughout the investment cycle is a recipe for disaster. It is tempting for investors to try to “time the market” – moving between asset classes by trying to predict the “next winner”. A better approach is to choose your own benchmark that will enable you to meet your goals. Then focus on a long-term strategy to achieve this return. A prominent investment axiom states “time in the market is more important than timing the market”.

 

Your financial adviser can help design a portfolio to meet your specific needs for the short and long term, so you don’t have to carry any regrets.

 

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.

Reaching 100 years old: some tips from Sweden

The key ingredients are simple according to Researchers at the University of Gothenburg, Sweden. “Refrain from smoking, maintain healthy cholesterol levels and confine themselves to four cups of coffee a day” says Dr Lars Wilhelmsen.

 

The study analysed data on 855 Swedish men born in 1913, including 10 who are over the age of 100. The scientists were able to identify factors that promoted longevity of life, particularly after the age of 55.

 

The study also showed that it also helps to own a house by the age of 50 — indicating a high standard of living — display a good level of middle-age fitness and to have a mother who lived a long time.

 

The research found that 27 per cent of the study participants survived to the age of 80 and 13 per cent to 90.

 

Of all the deaths occurring after the age of 80, 42 per cent were attributed to heart disease, 20 per cent to infection, 8 per cent to stroke, eight per cent to cancer, six per cent to pneumonia, and 16 per cent to other causes.

 

You can find the complete findings in the Scandinavian Cardiovascular Journal.

Can you gamble with cardiovascular disease

The National Heart Foundation of Australia has estimated that nearly 4 million Australians have cardiovascular disease (CVD); almost 20% of the population. CVD prevalence increases with age, with 35% of Australians aged 55-64 reporting a long term CVD condition.
The Heart Foundation goes on to say that cardiovascular disease is the second largest cause of disease burden in Australia; accounting for 18% of the total burden of disease.

Cardiovascular disease is still Australia’s biggest killer. In 2011, CVD was the cause of 45,600 (31%) of all deaths—responsible for more deaths than any other disease group.

Knowledge and application of that knowledge is our battle against cardiovascular disease. By knowing the risk factors and developing protective factors we can reduce the likelihood of suffering a heart problem or disorder and improve our capacity to respond should a disease occur.

A protective factor can therefore be described as one that contributes positively to an individual’s health and wellbeing. Factors which protect against CVD can vary from levels of HDL in the bloodstream sufficient to help protect against arterial plaque formation to behavioural factors, such as getting regular physical activity or eating plenty of fresh fruit and vegetables. Socioeconomic protective factors, such as having a strong social support network or an adequate level of income, are also important.

Knowledge of the potential for cardiovascular disease should also be a reason to discuss whether you or your business is prepared for it to happen to you or someone important to you. What would you do if you could not work or have the work done by an employee integral to your business? Would your business survive losing a ‘keyperson’ for an extended period of time, or worse, permanently?

Knowledge is good, but only if you apply that knowledge. Safeguard your family and your livelihood, review your insurance cover and be proactive in looking after your health.

If you are in doubt with regards to your requirements or if you would like to review your existing life insurance, please feel free to call me on 1300 78 55 77.

Fact sheet released by National Heart Foundation of Australia www.heartfoundation.org.au

SMSF Funds Lack Important Protection

‘SMSFAdvisor’ recently highlighted a study carried out within the insurance industry which revealed that the majority of SMSF trustees are underinsured when it comes to life insurance – possibly without even realising it. It went on to explain how only 13% of those partaking in the study actually had life insurance with many believing they did not need it or were ignorant to the fact their SMSF did not provide for them.

Life insurance is often misunderstood when it comes to knowing how much is required. It does not need to be complicated but it does need to be considered.

If you are in doubt with regards to your requirements or if you would like to review your existing life insurance, please feel free to call me on 1300 78 55 77.

Original article released by www.smsfadvisoronline.com.au on 6/06/2013

SMSF Life Insurance Opportunity

Discover how the new SMSF Master Insurance Plan can meet your life insurance needs.

 

Until now, SMSF members seeking life insurance have been restricted to purchasing a retail policy.

 

We now have access using a large insurance company’s products, to offer a specifically tailored insurance arrangement for SMSF members, providing them with access to the benefits of wholesale group insurance.

 

Potential savings for SMSF Members are quite strong, and more benefits can be gained via simplified underwriting and limited medical requirements up to certain limits.

 

Call us now on 1300-78-55-77 and ask more about the SMSF Master Life Insurance Plan.