GUIDES & RESOURCES

Life And Income Protection Insurance

The life insurance umbrella covers a range of product types. Life insurance, trauma cover, total and permanent disability (TPD) and income protection (IP) all cover you in different ways.
Life insurance vs income protection

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If you’re thinking about taking out life insurance or wanting to update your level of cover, here's a closer look at the four types of life insurance and the different ways they work to protect you.

What are the different types of Life Insurance?

There are four main types of life insurance, each designed to provide financial protection for different life events.

Type of insurance  Events Covered Payment Type Common Purpose
Life Insurance Death
Terminal Illness
 Lump sum Replacement income for spouse and dependants

 

Paying off mortgage

Funeral expenses

Total and Permanent Disability (TPD) Permanent loss of work income due to illness or injury  Lump sum Replacement of income up to retirement age

 

Initial and ongoing medical and home care

Paying off mortgage

Trauma cover  Critical illness (such as cancer, stroke, heart attack)  Lump sum  Recovery and rehabilitation expenses
Income Protection (IP)  Temporary loss of work income due to illness or injury  Regular monthly payments Replacement income for everyday expenses (such as mortgage, car payments, bills)

Because you never know what life can bring, choosing the right combination of life insurance can give you full-spectrum protection and greater peace of mind.

 

Example: How combining individual products ensures you’re fully covered*

Stephanie, a 39-year-old IT professional, was married with two dependent children. Stephanie had always been a fit and healthy individual.

Stephanie took out a life insurance policy with the following level of cover:

  • Life insurance for $750,000.
  • Trauma for $100,000 (stand-alone cover).
  • Income protection with a monthly benefit of $3500.

Unfortunately, one day Stephanie was diagnosed with breast cancer. She had to stop work to receive treatment over a six-month period.

During this period, Stephanie received her monthly income protection benefit of $3500 (after completing the applicable waiting period). This helped her and her family keep up with regular expenses, including the mortgage repayments, their groceries and other bills. Since Stephanie also took out trauma cover, she received a tax-free lump sum of $100,000. This benefit assisted Stephanie to receive the best treatment available.

Stephanie went into remission for two years. However, the cancer returned and sadly, Stephanie passed away. Her life insurance policy paid out the $750,000 benefit to her family. This allowed Stephanie’s husband to pay off the remaining mortgage and offered extra financial support and security to the entire family.

* This is an example only to illustrate the potential benefit of taking out life insurance and should not be relied upon as indicative of benefits payable

If protecting your income is important to you, let Lifebroker help you find a suitable policy. Compare Income Protection online or speak to one of our qualified insurance advisers on 13 19 20.

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