# What super funds can be used to buy trauma insurance?



## ta2693 (24 May 2007)

I want to buy some trauma insurance, preferably from super fund. Does anyone can help me which super fund could be used to buy trauma insurance and the fund must be able to release on financial hardship and compassionate grounds.

Thank you


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## Julia (24 May 2007)

ta2693 said:


> I want to buy some trauma insurance, preferably from super fund. Does anyone can help me which super fund could be used to buy trauma insurance and the fund must be able to release on financial hardship and compassionate grounds.
> 
> Thank you




You don't make it clear whether you are talking about a Self Manager Super Fund or a public SF.  If the latter, then just ask them.


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## ta2693 (24 May 2007)

Julia said:


> You don't make it clear whether you are talking about a Self Manager Super Fund or a public SF.  If the latter, then just ask them.




Public SF. ask whom? please give me some hint.

I have tried commonwealth bank, they said the money in their super fund can only be used to buy health insurance and tpd insurance and can not release in whatever situation unitl I am 65.


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## ta2693 (24 May 2007)

I just find one called max super http://www.maxsuper.com.au/ 
It looks good.
Is anyone here member  of this fund?


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## disarray (24 May 2007)

i recently rolled all my supers into MTAA industry super fund (open to the public). it is a top performer with low fees and you can purchase units of death / disability insurance / income protection insurance as part of your policy. they give you 1 unit of death insurance when you join.

www.mtaasuper.com.au


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## grumpee boi (24 May 2007)

ta2693,

Industry super funds will not offer trauma inside super.  the owner of a policy within super is the trustee of the fund who then has discretion as to who and when funds are paid out.  in the event of a trauma condition such as a heart attack it is more than likely these days that the sufferer will return to work thus not meeting a condition of release.  this could mean that the payout would be trapped inside the super fund as the potential recipient is not retiring.  It is also arguable that having trauma insurance inside the super fund would contravene the sole purpose test (ie providing funds for retirement basically).  this would make the fund non-complying and lose it's tax-advantaged status.

If you wanted my company does insurance for a fixed fee and we then give up to 30% discount on premiums for the life of the policy as we take 0% commission.  pm me if interested or check the website.  

for trauma it is also ususally best to pay for it on a level basis.  that is the premiums will be slightly more expensive upfront but not increase dramatically with age.  trauma policies have the highest incidents of claims and some companies will only allow a stepped premium (cost steps up with age) and it can end up becoming really unaffordable at an age when you are most likely to claim!

Adam


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## Pat (24 May 2007)

grumpee boi said:


> ta2693,
> 
> Industry super funds will not offer trauma inside super.  the owner of a policy within super is the trustee of the fund who then has discretion as to who and when funds are paid out.  in the event of a trauma condition such as a heart attack it is more than likely these days that the sufferer will return to work thus not meeting a condition of release.  this could mean that the payout would be trapped inside the super fund as the potential recipient is not retiring.  It is also arguable that having trauma insurance inside the super fund would contravene the sole purpose test (ie providing funds for retirement basically).  this would make the fund non-complying and lose it's tax-advantaged status.
> 
> ...




Good general advice there Adam  
A question though, why would a trauma payout "contravene" the sole purpose test? The same could be said for TPD. Is it the fact that trauma covers a much wide range of conditions compared to TPD? and the likelyhood of a claimant returning to work is high?
I have seen some instances of IP being owned under super.
Also, claiming financial hardship/compasionate grounds isn't so hard, just takes time...


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## grumpee boi (25 May 2007)

Pat,
Say you claim having just been diagnosed with breast cancer or having suffered a heart attack and survived.  the payout would normally be payable after surviving some specified period - usually 14 days.  It is not a given that you will retire from the workforce and as such the trustee is obligated not to payout the super money although you are entitled to make a claim (and would in all likelihood receive it outside super).

TPD or total and permanent disability is generally paid to those that cannot ever work again so it is considered retirement (albeit forced) from the workforce.  There can be issues though when you are eligible under the insurance policies definition of not being able to work again but do not satisfy the superannuation legislation of not being able to work again.  that is, with tpd it is more than likely that you need to satisfy TWO very different definitions to make a claim.  Eg a surgeon may have an 'own occupation' definition and after losing use of a hand cannot ever practise surgery again.  under his 'own occupation' definition he can claim but under super legislation the question is can he work in an occupation that he is reasonably suited to by training, education etc.  the answer is 'yes' as he could be a GP.  therefore his payment may be caught up inside super until he actually retires and triggers a condition of release.

Income protection is available inside super under 'ancillary benefits' inside the super legislation.  it has recently been decided to extend the availability from a maximum of 2 years up to age 65.  However many funds will need to rewrite their trust deeds and it remains to be seen how many will do so and how quickly they will.  

cost savings are not usually any greater although for those with limited cashflow IP inside super has benefits.

hope this answers your question.

Adam


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## grumpee boi (25 May 2007)

I should have added that income protection and TPD are tax deductible to the super fund but trauma is not.  

additionally income protection is tax deductible outside of super as well but you need the money to pay for the premiums upfront and then claim the deduction whereas inside super it is simply deducted from the balance.

adam


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## Bomba (27 May 2007)

if you had temporary salary continuance within a super fund do you get a tax deduction for the premium?

Ie.  does the tax rebate get added back to your account balance? 

I hear that this rebate is added back when you have a SMSF but if you had TSC in a retail fund then you do not get a tax deduction.

Can anyone clarify this for me?


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