Life Insurance – you’ve most definitely heard about it, considered it’s importance and then perhaps told yourself you’ll have a look into it at a later date. The reality is that not many individuals actually act upon this thought process, life insurance is an invaluable asset that provides protection and peace of mind when you need it most. It’s impossible to plan for the unexpected things in life, but signing up to a quality life insurance policy is a great place to start.
Although the vast amount of different policy options can seem daunting, it is important to fully understand what exactly your cover will and will not apply to. Below we outline the four major types of life insurance.
This type of policy will pay a ‘lump sum’ of money in the event of your death or diagnosis with a terminal illness. Individuals may make use of this money by paying off their mortgage or any debts, ensuring future living expenses of remaining family members are cared for, or even to put towards funeral expenses.
TPD cover, or Total or Permanent Disability cover, provides the same ‘lump sum’ payout as life cover, but does so upon proof of your disability and medical status. This money may be used to pay expensive and ongoing medial fees, for home and vehicle adaptations and could help to cover regular payments and costs that had previously been paid for through employment.
Trauma cover will pay a ‘lump sum’ in the event of a serious injury in an accident, or if you are diagnosed with a serious medical condition (from a pre-determined list of illnesses such as cancer). Trauma cover payments may contribute towards medical expenses and provide yourself and your family with financial support where you are no longer able to work.
Income Protection Cover
Rather than a lump sum payment, an income protection policy will pay you up to 75% of your regular income (and 100% of any Superannuation Guarantee payments) if you are unable to work due to sickness or injury. This money is invaluable to meet your regular and ongoing living needs if you are no longer fit for employment.
As you can see, life insurance is a highly beneficial tool which can provide individuals with financial peace of mind in the tougher times of life. However, such protection naturally comes with a cost. Premiums vary depending on a number of factors including individual health, tax status and age
Don’t wait for something to go wrong, act now and be financially prepared for the tough times in life. Forward planning combined with a sensible, quality life insurance policy will help you to overcome the challenges in life and provide you with a back-up plan worth spending money on.