Splitting Income Protection

Split Income Protection allows you to split your income protection ownership between superannuation and outside superannuation.

This allows you to maintain access to income protection benefits that wouldn’t normally be available if you took out income protection entirely through super.

How does Split IP work?

Split IP allows you to split the ownership of your income protection policy between superannuation ownership and self ownership allows you to take advantage of your super fund paying your premiums as well as having access to all of your super benefits:


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Benefits Available Inside Super

Total Disability Benefits
Partial Disability Benefit
Elective Surgery Benefit
Rehabilitation Benefit
Rehabilitation Expenses Benefit
Rehabilitation Program Benefit
Return to Work Benefit
Recurrent Disability Benefit
Death Benefit
Change of Waiting Period Benefit
Future Insurability Benefit
Extended Cover Benefit
Loyalty Benefit
Premium Holiday

Benefits Available Outside Super

Counselling Benefit
Nursing Care Benefit
Specified Injury Benefit
Crisis Benefit
Transport with thin Australia Benefit
Transport from Overseas Benefit
Accommodation Benefit
Family Care Benefit
Home Care Benefit
Respite Care Benefit
Waiver of Income Protection Premium Benefit

Why should I take out any of my life insurance through my super?

When you take out a life insurance policy through your super fund, it allows for your super fund to pay your insurance premiums, potentially freeing up post tax income. However it is important to note that this can potentially erode your super balance as funds will be diverted away from your investments to pay for your insurance.

Policy Ownership

It is also important to note that your super fund will become the owner of your policy, which means that proceeds from insurance claims will be paid out to your super fund. In order to access the benefit you will need to satisfy a condition of release as defined in the Superannuation Industry Supervision Act.

Tax Implications

Any income protection premiums paid for by your super fund are deductible to your super fund. You generally claim back a maximum of 15 cents per $1 of income protection premiums paid inside super.

You can generally claim a tax deduction on income protection premiums paid for outside of super. The deduction you can claim is determined by your marginal tax rate.

For example if you are earning over $80,000 per year and fall into the 37 cent tax bracket, you will be able to claim back approximately 37 cents for every $1 you spend on income protection outside of super.

Published: August 10, 2015

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