Insurance
The SMSF can pay for Trauma insurance but it is not tax deductible and there can be problems getting the money out if a claim is made and the member has not met a condition of release.
The SMSF can pay for Life insurance and it is tax deductible.
The SMSF can pay for income protection and it is deductible although you would normally pay for it in your own name because the tax deduction is higher.
The SMSF can pay for TPD insurance and it is tax deductible to varying degrees: TPD Any Occupation 100% deductible; TPD Own-Occupation 67% deductible unless it is bundled with life insurance in which case it (together with the life component) is 80% deductible.
The only one of the insurances that is deductible in the tax-payer’s own name is income protection. In most cases it is more tax-effective to have it in the individual’s name (Mark would get a 46.5% reduction in tax whereas his SMSF only gets 15%).
Another consideration is cost – it is possible to set up insurances in an industry/retail fund and just pay enough in contributions to cover the insurance premiums and fees. These funds can get insurance cover at very good rates.