Setting up SMSF - TPD, Insurance options

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Hosko, 25th Nov, 2016.

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  1. Hosko

    Hosko Well-Known Member

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    Hi All,

    Currently considering setting up a SMSF with around $300k balance.
    A question around what do people who have set up their SMSF do for TPD, Life insurances, and similar that for most employees is held by their super fund. It is required at my current stage of life with wife, young kids, bills to pay so non-negotiable not to have it.

    Thanks for your feedback
     
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  2. 158

    158 Well-Known Member

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    Non negotiable. DO IT!

    Piece of mind is cheap. Not having it is expensive.

    Period.

    pinkboy
     
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  3. Hosko

    Hosko Well-Known Member

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    Agree completely.
    Given you have a SMSF setup, do you mind sharing where you sourced your from? A financial planner or did you work it out for yourself through online facilities or similar?
    And any reason why you decided to do it this way?

    Thanks
     
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  4. 158

    158 Well-Known Member

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    I used the financial planner who signed off my statement of position for my SMSF. I honestly don't know much detail about the policies in place. I had my FP and Accountant communicate to formulate the right cover and I just pay the premium monthly.

    pinkboy
     
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  5. Simon Hampel

    Simon Hampel Founder Staff Member

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    My accountant also has financial planning qualifications and is licensed to advise on SMSFs as well, so can do all of this himself now - but the insurance in our SMSF was set up before he had that so at the time, he referred me to an insurance adviser who set it up for us and got the SMSF details from our accountant.

    Definitely get your SMSF to hold insurance for you - it's the most cost effective way to do it.
     
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  6. neK

    neK Well-Known Member

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    You always have the option to do a partial rollover into the SMSF and leaving a small balance behind to cover the insurance premiums.

    This can be useful if you have existing insurance accepted under AAL (Automatic Acceptance Limits) you have a pre-existing condition.

    As always, speak with a Financial Planner, have them compare what insurances you have, if you do decide to apply for new insurances, where there are exclusions, compare that to what you have already. (also, don't cancel any existing insurance until the new one is inforce).

    Also, take some time to understand Any vs Own occupation for TPD and how holding such policies in super can have negative effects, eg condition of release.
     
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  7. trinity168

    trinity168 Well-Known Member

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    Hi @neK - by doing a partial rollover to your SMSF, does it mean you double up on fees?

    Thanks.
     
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  8. Simon Hampel

    Simon Hampel Founder Staff Member

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    Depending on the fund, most would probably charge a percentage for fees, so you'll pay largely the same amount across multiple funds compared to consolidating in a single fund.

    Obviously a SMSF has extra fees because of tax returns and compliance and management fees will depend on the assets held - so not directly comparable to a non-SMSF super fund.
     
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  9. Shady__

    Shady__ Active Member

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    I've been looking into this very issue aver the past week.

    My wife and I setup a SMSF about 5 years through eSuperfund but we kept the minimum in our previous industry funds to keep the insurance current. I knew the cover was pretty basic (and cheap) but now know that I have life insurance cover of $380k and my wife has $280k. The TPD cover is significantly less.

    Going through all the calculators last week it seems that for $1mil life cover and another $1mil TPD plus Income protection of 60% of our current wages, the premium will be about $30/w for my wife and $85/w for me. Apparently if I was 4 years younger and female my premium would be the same as hers ;)

    What does everyone pay for their insurance? and how old are you?
     
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  10. trinity168

    trinity168 Well-Known Member

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    Extra death benefit = 70.13/month
    TPD = 27.56 / month
     
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