Life insurance is there for you in life emergencies. Because there's more than one way in which your life can change unexpectedly, insurers offer specific policies for various different scenarios and needs. We've broken down the main ones down for you below.
| Type | Payment type: | Main purpose | General entry age requirements |
|---|---|---|---|
| Life cover (Death cover) | Lump sum | Pays out to loved ones in the event of your death | 18 - 79 |
| Income Protection | Ongoing monthly benefit of up to 85% of regular income | Keep up with your expenses if you are forced to take some time out of work due to accident, illness or major trauma | 18 - 64 |
| Trauma cover | Lump sum | Pays out if you're diagnosed with specific illness e.g. stroke so that you can focus on your recovery | 18 - 64 |
| TPD cover | Lump sum | Payment to clear debts, cover medical costs if you become permanently disabled | 18 - 64 |
| Funeral Insurance | Lump sum | Cover the cost of your funeral (up to $30,000) | 18 - 79 |
| Accidental injury / death | Lump sum or income protection | Provides cover in the event of accidental injury /death (no sickness cover) | 18 - 64 |
Take our short quiz to find out what type of life insurance may be best for you.
The following calculation is an estimate based on your answers. There are limitations. You should always speak to an adviser to get a clearer understanding of your needs and the right mix of insurance for you.
Life insurance pays your loved ones (the person or persons you select as beneficiaries) a lump sum payment when you die or are diagnosed with a terminal illness. You can choose the amount they'll receive – the maximum sum insured limit is generally around $1 and $15 million. Life insurance is sometimes also referred to as life cover or death cover.
Consider life insurance if these are your priorities:
If you were to die unexpectedly, a mortgage would be left behind for your partner to deal with.
If you died unexpectedly, the cost of raising your children would be left for your partner to manage.
If you're not debt-free yet it's worth considering life insurance.
TPD insurance provides a lump sum payment if you suffer a serious illness or injury that leads to total and permanent disablement. In order for a claim to be paid, you will need to be unable to be likely to ever return to work again. It's often available as part of a life insurance policy.
Consider TPD if these are your priorities:
If you can't ever work again TPD can be used to take care of your mortgage.
TPD can assist with the costs of raising a family e.g. education in the absence of your income.
TPD can pay for expenses where health insurance doesn't – for example, if you need home modifications.
Trauma insurance is designed to provide cover when you suffer from a serious illness or health condition. When you experienced a specified trauma event, for example heart attack, cancer or stroke, trauma insurance provides a lump sum benefit. This type of cover is sometimes also referred to as critical illness insurance.
Consider trauma insurance if you want to:
For example if you are diagnosed with cancer or a heart attack this can help with medical bills and life after treatment.
Learn more about trauma insurance
Income protection insurance pays an ongoing monthly benefit to replace your income when you are ill or injured and unable to work. Most policies will replace up to 75% of your regular income and may also offer cover for involuntary unemployment.
You also have the freedom to choose:
If you are reliant on your income to pay the bills, including if you're self-employed or a high-income earner, then it's important to consider.
Income protection can help you keep up with mortgage repayments or rent if you are out of work.
You'll be able to keep up with the costs of raising children – for example, school fees, food and sports classes.
Compare income protection insurance
Personal accident insurance, which is sometimes also referred to as accidental injury insurance, provides a lump sum payment when you are injured as a result of an accident. It covers injuries such as dislocations, fractures, severe burns and loss of sight or limbs, with different benefits payable depending on the type of injury. It's different from income protection insurance because it doesn't cover illnesses – only accidents.
Get a quote for personal accident insurance
Funeral insurance provides a lump sum payment to your loved ones or beneficiaries when you pass away. This benefit can be used to cover the cost of your funeral and meet any other immediate expenses that may arise. It’s generally very easy to apply for funeral insurance cover – there's usually no medical tests required and you are guaranteed acceptance if you're under 70 years of age. However, if you can afford life insurance, this is often a better value option.
Read our comprehensive guide to finding the best life insurance policy for your situation.
Get help working out which type of life cover best fits your needs.
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