When insurance is held inside super, the premiums can generally be claimed as a tax deduction by the fund. If the fund made an election to claim future service deduction, the fund can’t deduct insurance premiums in future years. Because the premiums are paid from the SMSF, they are funded with the cash flow of the SMSF. Where the policy is owned by the SMSF, any benefits paid will be received by the fund rather than going directly to the members.
Read more about SMSF insurance.