Income and Life Insurance

Life insurance and income protection form part of your risk management plan which is designed to keep you on track if something unforeseen occurs.

There are four basic types of life insurances: life (death) insurance; income protection insurance; trauma insurance; and total & permanent disability insurance.

Life (Death) Insurance

Life insurance will pay your beneficiaries a lump sum if you die. Most beneficiaries use the lump sum payment to pay your liabilities, such as your mortgage. When considering how much you want to insure for, think about the following expenses and debts:

• Funeral expenses
• Mortgage debts
• Credit card debts
• Personal loan debts
• Education for your children
• Replacing your lost income

Income Protection

Income protection insurance will pay you a regular income if you become temporarily disabled from sickness or an accident. Most insurance companies only insure you up to 75% of your income. The payment is taxable, and is intended to help you pay regular expenses, such as:

• Home loan repayments
• Food
• Education
• Electricity
• Rates

Income protection premiums are tax deductible.

Trauma (Recovery) Insurance

Trauma insurance, also known as recovery insurance, will pay you a lump sum if you suffer from a serious medical condition. The lump sum is intended to pay related medical costs, extended rehabilitation fees, and provide you with breathing space from your commitments while you fully recover. A lump sum trauma payment can help you pay:

• Medical fees and costs not covered by Medicare or private health insurance
• Medical advice and treatment not available in Australia
• Loan repayments and debts
• A year off from work to help you fully recover

Total & Permanent Disability Insurance

Total and Permanent Disability (TPD) will pay you a lump sum if you become totally and permanently disabled. The lump sum is intended to pay your liabilities and replace your income. When considering how much you want to insure for, think about covering the following:

• Paying out your home loan or buying a home, if you don't have one.
• Paying out all remaining debts | credit cards, personal loans, car loans, etc.
• Paying medical fees and costs not covered by Medicare or private health insurance.
• Paying for ongoing medical fees and costs.
• Replacing your income.