Understanding life insurance and the different life insurance products can help you to make a more informed decision when and if you purchase it.

Each life insurance product has been designed to protect you and your family from events which may occur.

So what are these products?

Life Cover

It may be the simplest form of life insurance, but life cover is undoubtedly one of the most important as it helps you provide for your debts and dependants. Life cover will pay a lump sum if you pass away to cover debts.

The money goes to the people you nominate as beneficiaries on the policy. If you haven’t named a beneficiary, the super trustee or your estate decides where the money goes.

Income Protection Insurance

There’s not much you can do without an income. In monetary terms, your ability to earn an income is your biggest asset by far – which is why income protection is so important.

Income protection insurance pays part of your income if you’re unable to work. It can help pay the bills so you can focus on getting better.

Trauma Insurance

Trauma cover is all about supporting your recovery from a serious illness – helping you afford the treatment of your choice and allowing you to make necessary changes to your lifestyle.

Also called ‘critical illness’ or ‘recovery insurance’, it pays a lump sum amount if you suffer a critical illness or serious injury. This includes cancer, a heart condition, major head injury or stroke. Trauma insurance does not cover mental health conditions.

Total and Permanent Disability

TPD insurance pays a lump sum if you become totally and permanently disabled because of illness or injury.  It can provide a financial safety net to help support you and your family, and pay for medical and rehabilitation costs.

Each insurer has a different definition of what it means to be totally and permanently disabled. It can cover you for either:

  • Your own occupation — you’re unable to work again in the job you were working in before your disability. This cover is more expensive and is usually only available outside super.
  • Any occupation — you’re unable to ever work again in any job suited to your education, training or experience. This cover is cheaper but has a higher threshold to claim, so it’s less likely to pay out.

Understanding life insurance and what cover you might need can be difficult, which is why discussing this with a financial adviser is so important. Book an appointment online or call 08 8208 4777 for your complimentary consultation today!

Discover more on each of these products in our Insurance 101 series, located on our News page.