Rebecca, who is 49 years old, has been employed by XYZ Inc. for 27 years.

Her current income is $260,000, which is expected to be unchanged until her retirement.

She joined the superannuation fund on the starting date of her employment at XYZ, and her superannuation account balance is $400,000, which is all taxed elementnow.

She would like to have $1,000,000 lump-sum benefit in the event of permanent injury that makes her unable to have a gainful employment and, thus, she has to buy an additional TPD cover to meet her financial plan.

Betty can buy the TPD cover in the following five alternativeways:

1. outside the superannuation fund (ie - from own bank account),
2. through the superannuation fund using only SG contributions,
3. through the superannuation fund with personal concessional contributions,
4. through the superannuation fund with salary sacrifice contributions, or
5. through the superannuation fund with non-concessional contributions.

As a financial advisor, which option would you recommend?

Justify your advice by providing the pre-tax premium of each option, and in particular, report how/why your advice will depend on whether the policy within superannuation will be purchased from concessional contribution or not.

(For simplicity, you can make the following assumptions: first, regarding the tax-payable of TPD benefits, assume that all taxable components of TPD benefits are taxed elements and consider the maximum tax-payable in case Betty receives it today; second, the premium of TPD cover is 2%of the sum insured.