Life Insurance
Life insurance is intended for providing financial support to your loved ones when you die. A lump sum payment is paid to your chosen beneficiaries which can help to alleviate financial stress, pay for your mortgage and other expenses, and support your family moving forward. Most policies will provide cover regardless of the way a person dies, including accident, illness, disease and suicide.
When choosing how much insurance you need, it depends on a variety of factors. Some things to consider include:
• How important is your income to your dependents? Are you the sole breadwinner in your household, or does your partner also earn an income? Do you support any additional family members or others?
• How old are your children? Very young children require financial support for years, while older ones may be independent soon. • What are your living expenses? Do you have multiple loans, or do you own most of your assets?
• Will your beneficiaries continue to receive money through other means, such as investments or property?
Income Protection Insurance
Income protection insurance policies cover you if you are unable to work for a period of time. It is normally paid in instalments like a salary, rather than a lump sum, and is paid for only a specified period of time which can differ between policies.
Income protection insurance allows you to continue paying the bills so you can focus on recovering and getting back into work. Income protection is especially useful for people who are self-employed or contracting, who may not have access to sick leave.
Income protection insurance pays up to 75 per cent of your pre-tax income, which can significantly help when you are unable to work. To work out how much insurance you need, consider your monthly spending and how you could budget if you were not working for a period of time. It’s important to remember that serious injuries and illnesses can take months to recover from.
Total and Permanent Disability Insurance
Total and Permanent Disability (TPD) insurance provides cover in the event that you become totally and permanently disabled. The definition of this can vary between insurers. TPD insurance can assist in paying medical expenses and provide assistance with everyday spending.
TPD insurance is often used in conjunction with other insurance policies, such as private health insurance. It can assist to support your dependents when you can’t return to your career or are unable to work at all.
Trauma Insurance
Trauma insurance covers you in the event of a serious illness or injury. It is also known as critical illness insurance or recovery insurance. Policies can assist to pay for medical care, rehabilitation, therapy, special transport and more. It is similar to TPD insurance, as it covers you if you are unable to work due to your condition. However, trauma insurance assumes you will be able to return to some work eventually. Due to this, policies often have specified time frames.