Risk Insurance Types
This cover provides a lump sum payment upon death. A number of additional benefits are offered with life insurance such as total and permanent disablement and the early payout in the case of a diagnosed terminal illness where you have less than 12 months to live.
Total and permanent disablement is offered as a stand alone benefit by a number of insurers, but us usually an option on a life insurance policy. It aims to provide a lump sum of money should a person suffer an illness or injury which totally and permanently incapacitates them from working. This usually applies to any occupation for which they are reasonably suited by education, training and experience.
Most insurance companies now offer an ‘Own Occupation’ definition for selected occupations that would pay a benefit to a person that may still be able to work in some capacity but never again in their occupation (i.e. prior to the claim event). It should be noted that, importantly, arranging TPD cover with an own occupation definition under superannuation should be addressed with great caution. The trustes of the superannuation fund will not be able to release the funds to the member unless a superannuation Condition of Release has been satisfied. The usual TPD definition that applies in these circumstances is an “Any Occupation” definition.
Income Protection Insurance
Your ability to earn income may well be your greatest financial asset. Income Protection insurance enables you to insure against the loss of your income in the event that you are unable to work due to illness or injury. The policy can provide up to 75% of your income in the form of a monthly benefit, which will be payable after a selected waiting period, and will continue for your chosen benefit period whilst the disablement continues. The benefit is intended as far as possible to replace your income.
Critical Illness/Trauma Insurance
This pays a lump sum on diagnosis of serious illnesses specified in the policy. It is designed to ease financial pressures at a time of emotional stress by providing ‘get well’ money in order to pay out mortgages, to finance a break from work, or to provide an investment fund to supplement income if you choose to permanently reduce working hours.
Business Expense Insurance
How do you keep your business going if you become totally disabled and cannot work? Business Expenses Insurance is designed to alleviate this problem by reimbursing certain business expenses for the period you are totally disabled after serving out the relevant waiting period that applies.
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