GUIDE TO PERSONAL INSURANCE
DON’T LET THE ‘SHE’LL BE RIGHT’ ATTITUDE RUIN YOUR PLANS FOR THE FUTURE
Protecting your way of life through insurances will relieve financial pressure in what is often an emotionally and physically draining time. Below is an overview of the different types of personal insurances.
This provides your family or estate with a lump sum payment to clear your mortgage, ensure your family has enough money to live off and provide for your children’s education.
TOTAL + PERMANENT DISABILITY INSURANCE (TPD)
This provides you with funds if you are sick or injured and are no longer able to perform your occupation. Similar to Life Cover, TPD can enable you to clear your mortgage, provide for your ongoing income needs and cover any costly medical bills.
TRAUMA CRITICAL ILLNESS, RECOVERY MONEY, LIVING INSURANCE
This provides a lump sum for financial relief if you are ever struck down by a covered major illness, these can include cancer, heart attack, stroke, kidney failure, lung disease and many more. It may help relieve the pressure of the mortgage or allow the unaffected spouse to take time off work to take care of the kids or their partner.
Income Protection provides a monthly benefit of up to 75% of your income if you are unable to work due to any illness or injury. Any premiums paid for Income Protection are fully tax deductible (if premiums are paid outside super).
This type of insurance pays the bills that continue to roll in even if you are unable to work in your business. This may include wages for staff, interest repayments or rent. This cover ensures your business can continue to run even when you can’t.
To help understand some of the Insurance terminology we thought this list might come in handy.
LIFE COVER BUY BACK
When linked to Life Cover, any claim upon your TPD or Trauma polices reduces your Life Cover by the same amount. Life cover buy back allows you to reinstate the life cover to its original value.
TERMINAL ILLNESS BENEFIT
If you are given less than 12 months to live due to suffering from a terminal illness, some insurance providers will pay a benefit for the amount of your life insurance sum insured.
TOTAL + PERMANENT DISABILITY INSURANCE TPD
TPD has two occupation definitions, the first of which is ‘Any’ occupation. If you suffer a Total & Permanent Disablement and you have an ‘Any’ occupation definition, you will receive a benefit payment only if you are disabled to the extent of not being able to perform any job.
The second occupation definition is an ‘Own’ Occupation. This definition pays a benefit if you suffer a total and permanent disablement and are unable to complete the duties of your current, own occupation. This is viewed as particularly important cover for medical professionals.
TRAUMA RE-INSTATEMENT OPTION
Typically, once you claim upon your Trauma cover for any condition then you will no longer have Trauma cover and will be unable to obtain it again. A trauma re-instatement option allows you to obtain trauma cover again 12 months after a trauma insurance benefit is paid.
INCOME PROTECTION INSURANCE
Before your income protection payments begin, you need to be off work for a certain period of time, this length of time is known as your waiting period and may vary depending on your available leave or surplus funds.
Once an income protection benefit is paid you will continue to receive payments for the length of your benefit period or until you are able to return to work.
An agreed value policy relates to an income protection policy where the benefit amount (the amount you receive) has been determined at the start of the contract and there is no proof of earnings required at claim time.
Indemnity is the opposite to agreed value, at the start of the contract you nominate your sum insured without supporting evidence i.e. Financials. When you reach claim time you are paid 75% of your earnings at that time up to your nominated benefit amount.
INCREASING CLAIM BENEFIT
Whilst on an income protection claim, your benefit amount will increase each year in line with CPI (Consumer Price Index) if you have an increasing claim benefit.
This reduces your waiting time for income protection benefits to be paid when you are claiming due to an injury caused by an accident. Typically the waiting period on accident when an accident option is held is 3-4 days.
For more information, talk to our Advisers today!
Disclosure: Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.