It’s the end of another financial year. When filing your tax return, you may be eligible to claim a tax deduction on your life insurance premiums

Depending on the cover you hold and how you pay your premiums, you may be eligible to claim a tax deduction when you lodge your tax return this financial year. Let’s look at the different types of life insurance you may hold and what it means for you this tax time.

Life and Total and Permanent Disability cover

Generally, you can’t claim a tax deduction for Life or Total and Permanent Disability premiums, regardless of whether your policy is held inside or outside super.

However, if you hold your cover inside super but pay premiums from a non-super source, for example, through your employer or using a credit card or BPAY, then part of your premium may be tax-deductible.

If you’ve made a claim on your Life or Total and Permanent Disability cover, any benefits you receive are likely to be tax-free.

If your Life Cover benefit is held in super and paid to a nominated beneficiary who is a dependent under super and taxation law, then they usually won’t pay tax on the benefit either. However, this can be a complex area to navigate, so we recommend seeking professional tax advice.

Income Protection cover

If you hold an Income Protection policy outside of super, you can generally claim some or all of your premium as a tax deduction.

If your policy is held inside your super, you may be able to claim a deduction if you pay premiums from a non-super source – for example, through your employer or using a credit card or BPAY. If you pay your premiums from your super balance, they won’t be tax-deductible. If you’ve claimed on your Income Protection policy, you’ll generally pay tax on your benefits at the marginal tax rate that applies to you.

Get ready for tax time

For Income Protection claims, your PAYG or Benefits Paid statement will be mailed to you in the dates set out on our Statements page. If you’d like a copy of your annual payment summary statement for you SMSF policy, you can request a copy through our online request form.

Remember, taxation rules can be complex and change often, so it’s always a good idea to seek advice from your tax accountant and super fund before lodging your tax return. They can advise on the deductions you may be eligible for, and make sure you’re meeting your tax obligations.

Visit our Statements page for more information.