The following article and case study displays how you might be able to save a significant amount on your existing insurance, without reducing your cover or applying for new cover. Some simple restructuring under the instruction of an Advisor can ensure you remain protected in the most cost effective way possible.
Key Outcomes
- Clients are able to save a net of $1,178 p.a. without any underwriting or changes to sum insured
- Clients are able to fund their insurance through existing superannuation for administrative convenience and reduced out of pocket costs
- Clients are able to benefit from bundling and multi life discounts
- Clients could even potentially benefit from health discounts or policy repricing
When most people think about personal insurance—like life cover, income protection, or total and permanent disability (TPD)—they focus on the cover amount and premium. But who actually owns your policy can have a big impact on how much you pay, both in tax and in premium costs. Here are four factors that can be reviewed to optimise your cover:
1. Tax Advantages Through Ownership Changes
In some cases, holding certain types of insurance through superannuation can make premiums more tax-effective.
- Within Super: Premiums for life and TPD insurance held inside your super fund may be paid from pre-tax contributions, reducing the impact on your cash flow. This can often also be funded through an SMSF. Funding through Super usually results in a tax saving of 15%.
- Outside Super: Income protection premiums paid personally are usually tax-deductible. If your marginal tax rate is above 15%, you will usually end up with a bigger tax saving by holding Income Protection personally than within Super.
2. Bundling Discounts
If you have multiple policies with the same insurer—such as life cover, TPD, and trauma—you may qualify for multi-policy (bundling) discounts. This can reduce premiums by a noticeable margin, while simplifying your cover under one provider.
3. Premium Frequency Discounts
As is the case with most general insurance (eg. Car Insurance), you can usually benefit from a discount of around 8% by paying your policies annually rather than monthly. This is an easy saving, especially when funding insurance inside super – as it won’t affect your personal cashflow.
4. Multi-Life Discounts
If you and your partner both need cover, some insurers offer multi-life discounts when your policies are linked under the same provider. This can cut costs for both of you, even if the cover types differ. The provider used in the example below offers a 7.5% discount for having multiple lives insured and bundled in the one policy.
5. Reviewing Policy Terms
Reviewing the terms such as the benefit period or waiting period for income protection can drastically affect premiums. Ideally, if you have sufficient leave entitlements and cash in the bank, you can extend a waiting period to benefit from cheaper premiums.
Case Study
The following case study highlights the dollars you can save with just some simple restructuring. Luke and Lara are both 36 with income of $100,000 p.a. (each) working in marketing with separate insurance covers (with the same provider) as follows:
| Ownership | Type | Amount | Monthly Premium / Annualised | Premium After Deductions |
| Luke | ||||
| Personal | Life | $1,000,000 | $789 | $789 |
| Personal | TPD | $1,000,000 | ||
| Personal | Income Protection | $5,833 p.m. (30 day wait, benefit to 65) | $1,455 | $989 |
| Lara | ||||
| Super | Life | $1,000,000 | $580 | $493 |
| Super | TPD | $1,000,000 | ||
| Super | Income Protection | $5,833 p.m. (30 day wait, benefit to 65) | $2,055 | $1,747 |
| Total after tax costs | $4,018 |
Luke and Lara book an appointment with a Financial Adviser who advises them to make the following changes:
- Switch to annual pricing
- Linked policies together for Multi Life Discount
- All Life and TPD held within Super
- All Income Protection held personally.
- Based on their emergency cash reserves of $15,000, as well at roughly 4 weeks of leave entitlements each, waiting period on Income Protection is extended from 30 to 60 days.
| Ownership | Type | Amount | Monthly Premium / Annualised | Premium After Deductions |
| Luke | ||||
| Personal | Life | $1,000,000 | $707 | $601 |
| Personal | TPD | $1,000,000 | ||
| Personal | Income Protection | $5,833 p.m. (60 day wait, benefit to 65) | $1,096 | $745 |
| Lara | ||||
| Super | Life | $1,000,000 | $520 | $442 |
| Super | TPD | $1,000,000 | ||
| Super | Income Protection | $5,833 p.m. (60 day wait, benefit to 65) | $1,547 | $1,052 |
| Total after tax costs | $2,840 |
Luke and Lara file some simple paperwork online with their insurer to action the changes and begin saving at least $1,178 p.a. on their policies.
Why a Review Matters
Without regular review, you might be missing out on these savings. By making these changes, you could keep the same level of protection but pay less—and potentially improve your cash flow. You can book a complimentary consult with an Advisor at Rivkin Wealth Advisors, who can often identify premium savings. If your existing policies have associated insurance commission, this may cover the cost of advice provided.
Learning More
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