Tradesman Insurance in your SMSF

There are a couple of reasons for this, but one of the major reasons is that many builders and tradesmen know the property industry very well, and therefore like the fact that they can invest their retirement savings into property using their SMSF.

Another benefit is the ability to hold some of your tradesman insurance policies within your SMSF. Only certain policies can be help within your super fund, and we have listed the major policies along with their eligibility below:

Income Protection

Yes - Income protection insurance can be held within an SMSF, however there are a few catches. Generally speaking, some of the added benefits available on a normal income protection policy will not be available if the policy is held by an SMSF.

The reason for this is that the Superannuation Industry Supervision (SIS) Act heavily regulates how funds are released from your SMSF. For basic income protection policy benefits there are no problems, but some of the added features do not meet the regulations.

Public Liability Insurance

No - Public liability insurance is classed as 'general insurance' and can therefore not be held by any super fund, including an SMSF.

Life Insurance

Yes - Life insurance can generally be held by any SMSF.

Tradesman Tool Insurance

No - Tool insurance is classed as 'general insurance' and can therefore not be held by any super fund, including an SMSF.

Trauma Insurance

No - Although trauma insurance does fit within the personal life insurance class, it does not meet the SIS Act regulations and can therefore not be held within your SMSF.

TPD Insurance

Yes - But this is a more complex one. A TPD policy with an 'any occupation' definition generally can be held within an SMSF. This means that in a doctor's opinion you are unlikely to return to work in any occupation to which you may be suitable for by experience or qualification.

On the other hand, a TPD policy with an 'own occupation' definition cannot be held within an SMSF, as this doesn't meet the SIS Act regulations. This definition means that in a doctor's opinion you are unlikely to return to work in your current occupation, as opposed to any occupation.

There are plenty of advantages to holding your tradesman insurance within your SMSF, or in any super fund for that matter. One of the big advantages is that you can pay your premiums out of your super balance, which helps your cash flow.

Another benefit, depending on how you structure your income, super and tax, is that you can effectively make your personal risk insurance premiums tax deductible.

Income protection is always tax deductible anyway, but life insurance and TPD insurance is not. By structuring your finances correctly these two policies can also effectively become tax deductible.

Whether holding your insurance within your SMSF is the right strategy for you really depends on your own personal needs and objectives, but if that's the path you want to follow, then it is definitely possible with a number of your tradesman insurance policies.

For more information on your tradesman insurance needs please give us a call or complete our online quote request.

Information on this website should be seen as general advice only, as it does not take into account your personal circumstances. You should not act upon any information on this website without first consulting a qualified financial adviser or insurance broker
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