Life Insurance Package
14 May 2012
Many people talk about life insurance and income protection, but to really protect your family you need to consider a comprehensive life insurance package.
Although most people think of life insurance as a single form of insurance that only covers you when you die, it is actually a term used for a whole family of insurance covers including:
- Term Life Insurance
- Income Protection
- TPD Insurance
- Trauma Insurance
Each of these forms of insurance are important in their own right, but they certainly work best when combined into one comprehensive package.
It is important to know what each of these covers protects you again, so we will explain them for you below.
Term Life Insurance
This is the type of cover that most people think of when talking about life insurance. It is generally considered to be the foundation of any life insurance package.
Term life insurance policies pay out a lump sum if you die or are diagnosed with a terminal illness.
The proceeds are typically used to repay mortgages and other debts, and to provide income support to your surviving family and financial dependants.
Income Protection Insurance
Income protection is different to the other forms of life insurance in that it pays an ongoing monthly benefit rather than a lump sum benefit.
The insurance is designed to replace your income if you cannot work for a period of time due to illness or injury, and depending on your policy options it can replace you income all the way through to age 65.
The money received from an income protection insurance policy is to be used to cover your normal living expenses, just in the same way that you normal income would have.
TPD stands for total and permanent disability. The cover is very similar to term life insurance, however instead of paying out when you die it pays out if you are so seriously injured or ill that you cannot ever work again.
The specific definition for TPD insurance does vary from policy to policy, but essentially the policy required that a doctor judges you to be unlikely to ever return to work again as a result of your illness or injury.
Proceeds from a TPD insurance claim are generally used in similar way to a term life insurance claim. This can include repaying debts and liabilities and covering ongoing living costs. It is also often used to cover medical expenses and rehabilitation costs.
Also known as critical illness insurance or recovery insurance, trauma is designed to give you a lump sum payment when you need it most.
Trauma insurance pays a lump benefit upon diagnosis of a critical illness. There are dozens of illnesses and conditions covered, however the most commonly claimed on are cancer, stroke and heart attack.
Claim proceeds are typically used to cover medical expenses and replace lost income.
Insurance Package Quotes
When you bundle your insurance needs into one comprehensive package you will generally be offered a discount by the insurance company.
The level of discount can vary from one insurer to the next, and some insurers don't offer any discount, so it is certainly worthwhile to shop around to find the best overall package for your needs and budget.
For more information on life insurance and the associated covers please get in contact with us or complete out online life insurance quote request form.