Assume the following:  David contributes the maximum available concessional contribution into his superannuation fund (i.e. a flat $25,000 per year).  Growth rate of 8% per annum net of tax and fees for his balances (existing balance + annual contributions each year) in super, until he reaches the age of 60.  The total net cost of Life, TPD and Income Protection for David is $4,000 per annum and increases by 2.5% each year.  The cost of insurance above is the same whether the 3 insurance are in superannuation or external to superannuation. Based on the above, provide a detailed analysis to show the difference in David’s final superannuation balance when he turns 60, if he held these 3 insurances via superannuation or if he held them external to his superannuation.

Based on your answer to question 2, provide a critical analysis of which strategy would you recommend to David and why (i.e. hold the 3 insurances outside or inside super?). Remember, there are pros and cons for each approach!

Davids date of birth is 30/10/1986