It is mandatory that SMSF trustees formulate, review regularly and give effect to an investment strategy that has regard to whether the trustees of the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund.  Further, post 1 July 2014, trustees can’t provide an insured benefit in relation to a member unless the insured event is consistent with specific conditions of release such as death.  These words are largely derived from the SIS Regulations that form part of the operating standards that SMSF trustees must abide by.  A breach of the operating standards can result in administrative penalties being imposed on the SMSF trustees in their individual capacity.  Interestingly those penalties have increased from 1 January 2023.

This webinar will consider the pros and cons of holding insurance inside an SMSF.  Particular focus will be given to the taxation implications, both positive and negative, to both the member or their beneficiaries and also the fund when holding insurance linked to the payment of the following benefits following the satisfaction of the relevant condition of release:

• Temporary incapacity
• Permanent incapacity
• Terminal illness
• Death

No insurance presentation would be complete without considering insurance held prior to 1 July 2014, transferring insurance benefits to an SMSF, insurance in retirement phase, lump sums versus pension and of course identifying other reasons why insurance may be held in a fund.

Learning Outcomes:

At the end of this webinar, participants will have an appreciation for:

• When insurance premiums are deductible
• The key differences between temporary and permanent incapacity insurance and benefits
• The use of the future liability to pay a benefit deduction
• Investment based insurance requirements

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