Tax Treatment Of Trauma Insurance
Trauma insurance benefit payments are exempt from capital gains tax. The reason for this is that in comparison to income protection insurance, the benefit does not replace the policy owner's income but provides them with lump sum capital should they suffer a specified event.
Trauma insurance premiums are not tax-deductible to the funds trustee. Any concessional contributions made to pay for the trauma cover premiums are taxed within the fund. This can reduce the tax concession that the policy owner will receive on policy premiums to the difference between the super fund's income tax of 15% and the policy owner's marginal tax rate.
Trauma insurance provides a lump sum benefit in the event of suffering a critical illness or medical condition such as a stroke, heart attack or cancer. Most policies will cover up to 50 different conditions.
With premiums for trauma insurance generally not fully tax-deductible both within and outside superannuation, it is important that policy owners take the necessary steps to find competitively priced trauma insurance options. Some important steps for policyholders to take when considering taking out cover include:
The decision on whether or not to take out protective cover should never be based purely on price and while trauma insurance may be more expensive than other types of cover, it is becoming more and more essential as survival rates following medical events continue to increase. Many people are still surprised when they find out how affordable trauma insurance can be if they take the time to assess their insurance needs and compare the different options available. Source: finder.com.au