When it comes to protecting yourself and your family financially, there are a range of insurance policies which can help you achieve your goals.
Most Australians are aware of term life insurance, however there are other covers which can also provide protection when things go wrong.
In this guide we will take a look at some of the most common forms of cover which form part of the life insurance family.
Term Life Insurance
When most people talk about life insurance, this is the cover they are referring to.
Term life insurance provides cover for people in the event of their death or upon diagnosis of a terminal illness.
The policy pays out a lump sum amount which can be used for repaying debts, providing an ongoing income for the family or for any other worthwhile purpose.
Income Protection Insurance
Income protection is one of the most important form of insurance available for any working Australian.
In the event that you are unable to work for a period of time due to injury or illness, your income protection policy will pay you a portion of your income (usually 75%) each month until you are well enough to return to work.
All policies will have a waiting period and a benefit period. The waiting period relates to how long you must be unable to work for before you can claim, and the benefit period relates to the period of time you will continue to receive benefits for.
TPD stands for total and permanent disability. It provides a lump sum payment if you suffer an injury or illness which leaves you unlikely to ever return to work.
There are two definitions available with TPD insurance, which are known as ‘own occupation’ and ‘any occupation’.
To claim on an own occupation policy you must be deemed unlikely to ever return to your own occupation, whilst with an any occupation policy you must be deemed unlikely to ever return to any occupation which you may be suited to.
The funds from a TPD insurance payout are generally used to repay debts and liabilities, cover rehabilitation costs and provide for any home or car modifications that may be required. The funds may also be used to replace income if you do not have adequate income protection in place.
Suffering a critical illness will have obvious physical and emotional impacts, but there are also considerable financial impacts for you and your family to worry about.
A trauma insurance policy will pay a lump sum to you upon diagnosis of a critical illness. These policies cover dozens of conditions, with some of the common ones being cancer, stroke and heart attack.
Trauma insurance payouts are typically used to cover out-of-pocket medical expenses, accommodation and travel costs and to provide a financial buffer during this difficult period. It allows you to concentrate on your recovery instead of worrying about money.
Life Insurance Packages
Whilst some of the covers listed above can overlap in some situations, it is still important to include all of them in any comprehensive life insurance package.
By having a comprehensive life insurance package in place you can help to ensure that you and your family are protected financially should the worst happen.