Is TPD Insurance Tax-Deductible?
No matter how much we earn and how much we spend, we should all be covered by some form of insurance. Insurance has become a crucial aspect of our income eco-systems. It offers us much-needed support during times of uncertainty and gives us peace of mind every day.
We can relax because when we are driving, we know we have car insurance. We know when there is bad weather that our homes are covered by insurance. If we didn’t have insurance in these circumstances, we would be living in fear of our finances being ruined by an accident or an event that is out of our hands.
This is why it is essential to have insurance for our material possessions and accident and health insurance for ourselves. If you are the primary income earner in your family, then TPD (total permanent disablement) cover is an insurance policy you should have.
If you are injured in an accident or contract a serious illness, then you will likely go through a tough period of both mental and physical pain and exhaustion. You may even require a lengthy hospital stay and physical therapy. This will lead to loss of income for several months, or years depending on the severity of your injuries.
Unfortunately, the injury or illness might even cause permanent disability. This can be extremely tough in many ways, including financially. This is why TPD insurance is necessary. This way, you will have financial help to cover your medical expenses, health care, rehabilitation, possible home modifications and ongoing living expenses.
Those who have already purchased TPD insurance are forward thinkers.
However, since it’s tax time now, all of our thoughts are on possible tax-deductible items. So, are your TPD insurance premiums tax-deductible?
According to the ATO (Australian Tax Office), total permanent disability (TPD) insurance premiums are not tax-deductible, and this doesn’t change when purchasing from either an independent insurer or through your superannuation fund.
This is because the ATO doesn’t allow premiums to be tax deductible if the insurance that you have purchased covers you on any physical injury. So, for example, your income protection could be deductible because it is not compensating you for bodily injury per se, but rather a loss of income.
Unfortunately, this is just the way it works. However, don’t let this put you off from purchasing TPD. If your life involves any risk, it is always better to take precautions from uncertainties rather than regret it later.
So, once you have made the great decision to purchase TPD insurance, you might be wondering where you should buy it from. The advantages of purchasing your TPD directly from an insurer rather than your superannuation include greater flexibility & tailoring to your specific circumstances.
No matter who you choose to purchase through, always choose your insurer wisely. Read the PDS properly to understand the benefits you will get, the terms and conditions of your policy, claiming process, and most importantly, find out if the policy best serves your needs or not.
If you are looking for a general insurer to purchase TPD insurance, look no further than Aspect Underwriting. Aspect UW provides simple, tailored solutions for your TPD insurance. You can quickly jump online, get a quote from them and be insured within minutes. Head to their website now to learn more.