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