GUIDES & RESOURCES

Life insurance products

In this article, we’ll take you through some of the ins and outs of different life insurance products, so you can decide on one for you and your family.
Life insurance products

iSelect’s partnered with Lifebroker to help you compare a range of Life Insurance policies. Not all policies are available at all times or in all areas. Any advice provided on this website is general in nature and does not consider your situation or needs. Please consider if any advice is appropriate for you before acting on it. Learn more.

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What is life insurance?

If something were to happen to you, such as a serious accident, then life insurance could help give you and your family cover for some of the major expenses that you may incur. These expenses could be things like medical bills, modifications to your home as a result of living with a disability, or even funeral arrangements.

Information provided within this article is general in nature and should not be treated as a recommendation. Ensure you review an insurers Product Disclosure Statement (PDS) before deciding on the suitability of any product.

How does it work?

If you find yourself in a situation where you or your family need help with sorting out your finances after an accident or medical event, then you would need to submit a claim to your insurer.
So if you or your nominated beneficiary make a claim, then a lump sum payment may be provided to you or your family. This could be in the event of being diagnosed with something like a terminal illness, or even in the event of your death.

What could my family and I be covered for?

Depending on the policy you take out, you would typically be covered for the amount you are insured for under your policy.
Since this can vary, the amount you receive depends on the terms and conditions of your policy and circumstances in which you make your claim, as well as any specific inclusions or exclusions in your policy.

What types of cover are available?

A life insurance policy can include multiple types of cover depending on your circumstances. Here are the main types of cover:

Life Cover

Generally speaking, a life insurance policy generally pays a lump sum amount of money when you pass away or are diagnosed with terminal illness. The money is given to the people nominated as beneficiaries that you’ve specified in your policy.

Your beneficiaries can then choose how they use the money which could be used to help cover mortgage and credit card payments, child care, school fees, and other living expenses.

Total and Permanent Disability (TPD) Cover

TPD Cover can provide financial security for you and your family if you were unable to ever return to work due to becoming ‘totally permanently disabled’ from illness or injury.

But every provider typically has a different definition for ‘totally and permanently disabled’, which is why it’s important to read the product disclosure statement (PDS) before choosing a policy.

What does TPD insurance typically cover?

Depending on your provider and policy, you may qualify for a benefit payment if due to sickness or injury you meet any or all of the criteria listed below:

  • You’re unlikely to work in your occupation ever again
  • You’re unlikely to work in any occupation again
  • You’re unlikely to perform domestic duties ever again
  • Permanent loss of your functional capacity
  • Significant impairment to your whole body
  • Loss of limbs and or vision
  • Unable to look after yourself ever again (which relates to the ‘activities of daily living’ policy definition)
  • Permanent loss of intellectual capacity

As all policies are different, it’s important to review the PDS for information about coverage, inclusions and exclusions.

What are some of the different occupation definitions listed under TPD Cover?

Listed below are some common terms that can be found in TPD insurance policies.

Own occupation

This refers to whether or not you’re only unable to work in the job you were working in before your disability.

 

E.g: you may no longer be able to work on-site following an accident or injury if you’re a builder or electrician, but you may be able to still work in an administrative or office capacity.

Any occupation

This refers to whether or not you’re unable to work in any occupation suited to your education, training or experience following an accident or injury.

 

Simply put, if your policy uses the ‘any occupation’ definition, then you may not be able to make a TPD claim unless you’re unable to work in any occupation at all following an accident or injury.

Activities of daily living

If you’re unable to perform some of the tasks listed as activities of daily living in your policy, you may be able to claim payable benefits on your TPD policy.

 

Depending on your policy and provider, some of these activities can include bathing and showering, dressing and undressing, eating and drinking, using the toilet, and the extent to which your movement is restricted either by walking, or by wheelchair or some form of walking aid.

Domestic duties

This refers to whether or not you’re able to perform domestic duties following an accident or injury.

 

Domestic duties cover is typically relevant for someone whose sole occupation is to maintain the family home.

 

E.g: cleaning of the home, preparing family meals, doing family laundry, shopping for family groceries, and taking care of dependent children.

For more information, follow on with our article about TPD Cover here.

Trauma Cover

Trauma Cover, (a.k.a: ‘critical illness’ insurance or ‘recovery’ insurance), can help provider cover for you if you’re diagnosed with a specified insurable illness or injury that is covered in your policy.

It’s typically paid as a lump sum, and it helps provide financial assistance to access medical treatment as well as rehabilitation, and reduce your work hours to help you focus on your recovery.

Specific costs during a recovery period can include:

  • Medical costs not covered by your private health insurance
  • Any ongoing costs of treatment
  • Special transport requirements
  • Modifications to your house

What does Trauma Insurance cover?

This depends on the particular policy that you choose. That said, common types of illnesses or events you can generally claim against can include:

  • Critical Injuries
    This includes severe burns or major head trauma. Trauma Insurance also can include cover for injuries leading to blindness, loss of hearing, or loss of a limb.
  • Critical Illness
    This includes heart conditions, neurological disorders, organ failure or transplants and blood diseases of specific severity which is set out in the policy. Cover for cancer can cover most types of cancers like melanoma, malignant tumours, leukaemia, and prostate or breast cancer if they meet the specified severity.

For more information on Trauma Cover, read our article here.

Income Protection Insurance

This type of cover replaces a percentage of your income in the event that you’re unable to work because of injury, accident or illness.

If submitting a claim, you’d be provided with an income, generally up to 70% of your gross wages, for a set period of time payable either weekly or monthly which could allow you to recover with peace of mind.

Some policies can also include or offer an optional extra lump sum payable to your beneficiaries should you pass away, or become permanently disabled in an accident.

What does Income Protection Insurance cover?

It typically replaces up to 70% of your income lost as a result of your inability to work because of an injury, accident or illness, for a set period.

The illness, accident or injury must incapacitate the policyholder for longer than the policy’s waiting period. It’s important to note that while various illnesses and injuries are covered, conditions resulting from certain circumstances may not be eligible for income protection.

These can include pre-existing conditions, pregnancy and childbirth, and injuries or illnesses resulting from intentional, criminal, or self-inflicted acts, alcohol or drugs, and sports or motorsports.

For more information about Income Protection Insurance, read our article here.

What else could I consider before I sign up?

Before you sign up for Life Insurance, it’s important that you review your policy’s Product Disclosure Statement (PDS).

iSelect has partnered with Lifebroker to help you find a Life Insurance policy from their range of providers. Start comparing policies online today, or call our friendly team on 13 19 20.

Last updated: 06/05/2022

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