Risk Insurance

The terms and explanations identified below are intended as a general summary only of some of the more important features associated with an insurance policy. Each Life Company has a different contract and different definitions for clauses that they have in their policy. Some policy definitions are better than others.

Life Insurance

Life Insurance is the ‘cornerstone’ of personal insurance protection. It is an important aspect in building financial security to ensure that you and people dependent on you are protected against the unexpected.

Life Insurance pays an agreed ‘lump sum’ payment in the event of death during the term of the policy. An appropriate level of cover should be decided after discussion with a qualified adviser. Factors to be considered should include, the level of household debt, the education and care needs of any children, the amount of potential household income that needs to be compensated by premature death etc.

Premiums are based on a function of age, sex, sum insured, smoker status etc.

Income Protection

As our income is generally seen as our biggest asset, it is extremely important that this asset is protected. Income Protection is designed to replace income in the event of illness or accident.

Income Protection enables you to insure a maximum of 75% of your regular personal exertion income (including salary sacrificed superannuation contributions) against sickness or injury that prevents you from carrying out your work. You need to be under the care of a Doctor.

There is a waiting period before benefits are paid under this type of cover. A short waiting period is generally designed to suit those who could be in financial difficulties very quickly if their income stream stops

Benefit payments continue until you are able to return to work subject to maximum benefit periods. Typical benefit periods range from 1 year, 2 years, 5 years, to age 55, to age 60, to age 65.

Generally, premiums for this form of cover are able to be claimed as a Tax Deduction, however any insurance proceeds paid are subject to income tax – you should consult your Accountant for formal confirmation.

Total and Permanent Disability Insurance (TPD)

TPD provides an agreed ‘lump sum’ payment should you be classified as being permanently disabled and never likely to perform:

• your usual occupation Or
• an occupation for which you are qualified by reason of education, training and experience Or
• any occupation

The more generous the definition, the more expensive the cover.

There is a waiting period before payment is made which varies between insurers but is typically classified as being 6 months.
Benefits are generally considered tax free. (This may not be the case depending on ownership of the policy) You should consult your Accountant for formal confirmation.

Trauma / Critical Illness / Recovery Insurance

With the remarkable advances in modern medicines, more and more people are now surviving major traumas such as heart attack, cancer, coronary artery surgery, etc. However, the recovery period and the cost of care associated with such illnesses normally places extreme financial strain on the person suffering the illness.

Trauma Insurance pays an agreed ‘lump sum’ to the insured person upon diagnosis of one of a number of specified conditions (up to 30 conditions can be specified). Some policies have a 14 day survival period requirement after diagnosis.

Such a payment will assist you to be financially secure and may be used in any way you like.

Benefits are generally considered tax free. You should consult your Accountant for formal confirmation.

This information is provided on a general basis only. No account has been made of any person’s individual circumstances. You should seek professional advice before any decision is made and read the insurance company’s Product Disclosure Document for full terms and conditions.