Living Expenses Insurance

Income protection for retirees, part time and casual workers and stay-at-home parents

Standard income protection insurance pays out a portion of your usual income if injury or illness leaves you temporarily unable to work. This can be very helpful, but leaves out homemakers, stay-at-home parents, part time and casual workers and anyone else who makes valuable contributions to the house hold.

Consider living expenses insurance if you can't get income protection

  • Cover for unpaid roles.  Living expenses insurance recognises the value of housework, cooking, cleaning, caring for children and other essential but unpaid jobs.
  • Part time and casual workers. You might not be working enough for standard income protection insurance, but that doesn’t mean their earnings are any less vital. Living expenses insurance is well suited to part time and casual workers who want to protect their livelihoods.

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What are the key features of living expenses insurance?

At its core, a living expenses insurance policy will directly protect your income or the value of your day-to-day household contributions, much like income protection. This might be one of the more important types of insurance because it protects you from financial loss and means you can maintain your standard of living even when temporarily unable to work.

As well as the protection of your income, living expenses insurance includes other additional features as well. In some ways you might think of this type of insurance as a compact alternative to a full combined life insurance policy, designed for people who are on the lookout for cost-effective cover.

  • Death benefits. Get death benefits up to three times your monthly benefit if you die or are diagnosed with a terminal illness.
  • You do not have to be currently claiming benefits from the policy to get this.
  • The benefits you receive are generally smaller than what you could get with a full combined life insurance policy. They are intended to help your family and friends cope with funeral and related costs, rather than providing for your children or partner.
  • Specific injury benefits. If you suffer certain specific injuries, this option will pay a monthly benefit to help you adapt to disability without simultaneously needing to worry about keeping a roof over your head. You get six months of disability benefits for paralysis and three months for loss or limbs or sight.
  • You receive these benefits regardless of whether or not you are working, disabled or receiving medical attention.
  • These benefits resemble the trauma insurance part of a combined life insurance policy. One of the main differences is that with living expenses insurance you will typically be paying less overall, but you will only get cover against certain disabling injuries.
  • Significant disability benefits. If a significant disability leaves you unable to carry out independent daily tasks, such as dressing, using the bathroom or getting out of bed unassisted, living expenses insurance can help pay for the requisite accommodation and care.
  • This means that homemakers, retirees and stay-at-home carers are also able to access disability benefits with this type of policy. Under this policy, a disability is defined by more than just “not being able to work”.
  • Waived premiums

If you claim benefits from living expenses insurance, you will not be required to keep paying your premiums.

  • When you pay premiums you should be entitled to cover you can actually use without running into complications. The waived premiums feature may help.
  • Indexation for inflation

This feature indexes your policy and increases your cover to keep up with inflation.

  • You get to choose whether or not to accept the indexation each time, so there won’t be any unpleasant surprises and you can see the policy indexed at a rate that works for you.
  • If you choose to accept the option, your premiums will also increase accordingly. If you choose not to, they won’t.

Who can utilise living expenses insurance?

Living expenses insurance is for almost everyone, but some people in particular might get more out of its benefits:

  • Retirees can get cover even when not eligible for typical income protection or life insurance policies. Living expenses insurance can be taken out, and benefits will be paid, up to the age of 80. Meanwhile, it recognises disability according to your ability to perform daily tasks rather than to perform a job, and specific injury benefits can offer additional protection more affordably than combined life insurance.
  • Casual and part time workers may be interested in living expenses insurance. If you don’t have the financial security to commit to a comprehensive life insurance policy but you’re still worried about what will happen if you’re unable to work, or who will cover costs should you die, living expenses insurance may be worth looking into.
  • Homemakers and stay-at-home parents can finally get suitable cover with living expenses insurance. When a parent or a homemaker is unable to work, things can fall apart very quickly. Living expenses insurance can cover you, similar to how income protection insurance covers lost income, without you needing to prove your income.

Compare your options with an adviser

Maurice Thach

Maurice is a publisher for finder.com.au. Daily research of Australia's insurance offerings allows him to breakthrough the noise of the many policies out there to uncover what can (and can't) be covered. Maurice hopes to make finding the right insurance easier for all.

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