Like it or hate it, insurances are a necessary part of life. Given the risks involved when owning a house, driving a car, playing sport or running a business, insurance is the mechanism for protecting your financial interests against loss or damage.
Risk Insurance policies provide an agreed benefit on the happening of an insured event. A pure risk policy does not provide for a surrender value, that is, there is no investment component to the policy.
The main types of risk insurance policies include:
1. Term Life Insurance
These policies are very black and white – when you die a benefit is paid. Some life policies have a “terminal illness benefit” – this will pay the sum insured prior to death, where the life insured is diagnosed with 12 months or less to live. Features to look for in a life insurance policy are the terminal illness benefit, guaranteed renewability, age renewability and that the policy covers accident and illness.
2. Trauma Insurance
Trauma insurance provides a lump sum payment upon the diagnosis of one of a number of listed medical conditions. Every policy has a different list of medical conditions that are covered. Approximately 93% of all claims are as a result of cancer, heart attack, coronary artery surgery and stroke.
3. Income Protection Insurance
Income Protection provides a monthly benefit to replace up to 75% of your income in the event you are unable to work due to an illness or an accident. Fully tax deductable.
4. Total & Permanent Disability (TPD)
This is when you are unable to perform at least one duty of your normal occupation. It provides a lump sum in the event that you can never return to work in your own or any occupation. These policies are inexpensive but can be difficult to claim against given the policy definitions relating to your capacity to work when you are seriously injured.
Insurance & Life Stages – Guide
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If you have any questions, please don’t hesitate to contact us on 03 9886 0800 or email us at team@tagfinancial.com.au.
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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2022. Please do not reproduce without the expressed written consent of the author.