A Life or Term Life Insurance policy will pay out a lump sum benefit if you die before an agreed date (the ‘term’, which is typically until you reach the age of 99), or if you are diagnosed with a terminal illness where you are given less than 12 months to live.

This is the simplest and most affordable type of life insurance, and will ultimately provide for your family and dependents after you die.

An Income Protection Insurance policy, or Salary Continuance Insurance, will provide you with a replacement income if you are unable to work due to illness or injury. Most policies will pay up to 75% of your net income for a set period, or until you reach the age of 70.

This type of insurance can be a bit more complicated as the definitions and terms of the policy will differ from provider to provider, so it is vital that you make sure you fully understand what your particular policy includes. Generally speaking, income protection premiums are tax deductible.

A Trauma Insurance policy (or Critical Illness Insurance) will pay a lump sum benefit if you are diagnosed with a pre-defined critical illness such as cancer, a heart attack or a stroke. It is designed to supplement your income whether you are able to work or not, and can be payable in addition to Income Protection or Disability Insurance.

Like Income Protection Insurance, the terms and included critical illnesses of your Trauma Insurance policy will differ between providers. Trauma insurance is often utilised to provide a financial cushion that allows your loved ones to take off work to be with you in your time of need.

A Total and Permanent Disability Insurance policy will pay out a lump sum benefit if you become totally and permanently disabled from sickness or an accident, and you are not expected to be able to return to work.

Definitions for the included occupations and activities will vary between insurance providers, so make sure you fully understand the terms of your particular TPD Insurance policy.

You need to protect your independence and your income. Income Protection Insurance will help you maintain your independence if you ever find yourself unable to work, by making sure you can meet your costs of living such as bills, rent and groceries.

Handy Hints:

The best time to start thinking about applying for Income Protection is when you’re starting a new job, you have just taken out a personal loan to buy a car or a house, you are self-employed and have key staff within your business, you have gone into business with a new partner, or you have just taken out a business loan.

When applying for Income Protection, make sure you take into consideration how long you would be able to support yourself before you need to claim. Different providers have different waiting periods on their policy, which is the amount of time you are unable to work before you can make a claim. It will usually range from between 14 days to 2 years, so think about how long you would be able to live off your savings or other income sources before you would need to claim Income Protection.

Some insurance providers will reduce your Income Protection payments if you have other sources of income such as sick leave from your employer, Centrelink benefits or managed investments. Make sure you check your insurance policy to see if this is the case.

You need to be able to enjoy the time you spend together without financial difficulties getting in the way. It’s important to plan for the future, so you can take out a Life Insurance policy that will provide you with the protection you need.

Handy Hints:

The best time to start thinking about applying for Life Insurance is when you’ve just bought a house and have a mortgage to go with it, you are renovating your house and need to increase or redraw your mortgage, you are about to start a family, you have a lot of personal debt, or you have received a pay rise.

If you have a mortgage, you may already have mortgage protection included in your loan agreement. Take into consideration how this will affect your payments if you are put into a financially difficult situation.

Your superannuation may be paid out to your beneficiaries if you pass away unexpectedly. Make sure you know who your nominated beneficiaries are, as these minor details are often forgotten to be updated when you get married or have a de facto partner.

It’s vital that you are able to protect and support them if something unexpected happens and you are unable to work for a long period of time. Income Protection or Disability Insurance may be some options to provide you with the peace of mind you need.

Handy Hints:

The best time to start thinking about applying for Life Insurance is when you are planning to send your children to a private school or university, you have a special needs child who will need care when you’re gone, you have physically or financially dependent parents, or you want to leave an inheritance for children or grandchildren.

If you have dependent children and are in a relationship, you could consider a joint life insurance policy which would cover both you and your partner under one policy, and would pay out the benefit if one or both of you pass away unexpectedly.

If you work in a high-risk job, your employer will have already taken out a workers compensation policy which will cover any immediate medical bills. But you may need another insurance policy to cover any gaps, so it’s a good idea to find out exactly what your workers compensation will cover.

If you need a lump sum payment to cover sudden medical bills, check with your insurance policy to see if it will pay a percentage of the benefit or the whole amount, and when you are able to make a claim.