When you choose this type of coverage you pay for a specific lump sum that is paid if you die. The payout can be used for any purpose – to pay off debts, or invested to generate an income stream for surviving family.
The premiums will increase with age (as your risk of dying is obviously greater as we age). As your needs change you can easily adjust the amount of cover you have.
This type of insurance is also known as accident and sickness insurance and is vital for anyone who is an employee or an employer. Income protection can replace up to 75% of all your income if you are unable to work due to unexpected illness or injury.
It means that you can make ends meet in the event of a significant loss of income caused by a long-term illness or injury without having to sell your house, business or possessions. You can get paid up to 70 years of age, allowing you to maintain your lifestyle and keep paying your bills, mortgage, school fees or loans.
It is important to realise that sick pay, worker’s compensation or government support are not long-term or sufficient solutions in the event of illness or injury that prevent you from earning an income. You may get a limited amount of sick pay from your employer if you receive a salary, but it won’t last long. Workers’ compensation only covers you for a short time and is solely for work-related injuries – a small percentage of causes of disability.
Otherwise known as ‘crisis’ or ‘vital’ cover, trauma insurance pays out a lump sum on the diagnosis of a range of life-threatening conditions such as cancer, heart attack, stroke, heart bypass surgery, paralysis, and head trauma. It is often attached to life insurance.
Trauma insurance is designed to pay the inevitable medical bills associated with a major illness, or fund a holiday, pay out a home mortgage, or allow the injured person to work part-time until retirement.
Total and Permanent Disability Insurance Cover (TPD) offers protection and financial peace of mind if the life insured becomes totally and permanently disabled.
In the event of a TPD claim, the payment can be used to eliminate debt, pay ongoing medical expenses, make necessary home modifications, or to hire home care services such as nursing, cleaning and cooking.
This is a one-off lump sum payment, unlike Income Protection insurance, which makes regular ongoing payments.