What types of personal insurance are available in Australia?
Personal Insurance is a type of cover that provides financial security to your life and your family's in the event of a serious injury or illness, loss of ability to earn, total and permanent disablement or death. This cover will enable you and your family to maintain your way of living by providing payment to cover any outstanding debts and everyday expenses. The four main types of personal insurance include:
- Life insurance. This is designed to pay out your dependents a lump sum if you pass away.
- Total and permanent disability insurance. This type of cover provides you with a lump sum if you are injured or fall ill and are unable to work permanently.
- Critical illness insurance. This provides you with a lump sum if you suffer a serious injury or illness as defined the policy.
- Income protection insurance. This replaces a portion of your income.
Compare direct life insurance options
The four types of personal insurance coverage
Four types of insurance can sum up all other insurance plans available in the market. They may have similar features and benefits, but they have all been designed for one purpose – to give you peace of mind and protection.
They can be purchased separately or as a package depending on your needs and the risks you are exposed to.
1. Life Insurance
Life insurance is one of the oldest types of insurance in existence. It was also the first to be made readily available to the general public. There are two types of life insurance; whole life policy, in which Australian life insurers offered in the past and term life cover.
2. Income Protection Insurance
Income protection insurance is the most overlooked type of insurance policy. A lot of people would purchase car insurance or home insurance without batting an eyelash; while not giving income insurance a thought. Contrary to what is circulating, income insurance can be a great help to you in one of the most stressful times of your life – temporary unemployment due to an illness or injury, which could often last for an extended period of time.
3. Critical Illness or trauma
Critical Illness insurance pays you a lump sum upon diagnosis of a traumatic medical event, such as heart disease, cancer, or stroke. As it is a type of a living insurance, it does not wait for you to die before you can benefit from it. Also known as Trauma Insurance, Critical Illness insurance can be a great help when you are going through tough medical situations by providing an alternative source of funding to your financial commitments, so that you can focus on getting better.
4. Total and Permanent Disability (TPD) Insurance
TPD cover provides a lump sum payment to help you cover for the costs and expenses incurred when you have been rendered permanently disabled, due to a serious illness or injury, and it is unlikely for you to return to a full working capacity in the future. This lump sum benefit can be used by you and your family to:
- Pay for medical expenses
- Pay for your rehabilitation costs
- Cover fees on hiring a nurse/housekeeper
- Modify your home and vehicle to cater to your new condition
- Keep up with daily living expenses and other immediate financial commitments.
In short, Total and Permanent Disability insurance allows you the financial freedom that could otherwise be difficult to achieve when you become disabled. TPD insurance can ease the stress of the situation and you can have the peace of mind knowing that there is a financial backup to fall upon despite of your new condition.