What is life insurance?
Life insurance is a lump sum payment to your family and other beneficiaries in the event of your death or upon being diagnosed with a terminal illness. The purpose of life insurance is to provide your family with financial security if you were to pass away.
Life insurance can also include multiple different types of cover for you to choose from, depending on your circumstances:
- Term life insurance
- Trauma insurance: Provides a lump sum of money to help you meet medical expenses and clear debts when you have suffered a medical trauma
- Total and Permanent Disability (TPD) Cover: Provides a lump sum payment if you become totally and permanently disabled so that you are no longer able to work
- Income Protection Insurance: Provides a monthly payment if you are unable to work due to serious illness or injury
The table below shows some of our best life insurance options available for a non-smoking female aged 30-39 years old, who is working in a white collar occupation group such as a clerk or office administrator. This table is sorted by Star Rating (highest to lowest).
Compare the rest of your options when it comes to term life insurance using our website:
Why do you need life insurance?
Life insurance can provide financial peace of mind that you and your family would be covered for some of the major expenses of life if something were to happen to you.
As discussed above, there are multiple different types of cover that fall under the life insurance “suite” of products, and each type of insurance can provide a certain benefit payment to help you and your family after different types of life events, such as death, critical illness, disability, or serious injury.
Here’s a quick snapshot of why each of these products can be extremely useful as a financial safeguard…
What is Term Life Insurance
Term life insurance, is what we usually mean when we talk about “life insurance”. It provides a lump sum payment to you or your beneficiaries (your family or the loved ones you specify in your policy) when you die or are diagnosed with a terminal illness that will end in death within a specified period – usually 12 or 24 months. If you are the policy owner and have not nominated any beneficiaries on the policy, the proceeds will be distributed according to your will.
Term life insurance can help your dependents (your spouse and/or children) pay out any debts that you may have, and it can provide for the future needs of any children you have. It can also provide a lump sum of money that that your partner can invest and gain an income from.
Click here for more information about term life insurance, or compare your options using our website:
What is Trauma Insurance
Trauma insurance can provide a lump sum of money to help you meet medical expenses and clear debts when you have suffered a medical trauma.
Medical traumas are defined by each policy as a list of specified illnesses and injuries. The type of traumas covered will differ between policies, with some of the more commonly-defined events being cancer, heart attack, and stroke.
Click here for more information about trauma cover, or compare your options using our website:
What is Total and Permanent Disability (TPD) Cover
TPD cover pays you a lump sum if you become totally and permanently disabled.
The definition of total and permanent disability (TPD) varies between insurance companies, but it essentially means that you are disabled to the extent that you will probably be unable to work again. This can be defined as unable to work in your own current occupation, or unable to work in any occupation again.
Click here for more information about TPD cover, or compare your options using our website:
What is Income Protection Insurance
Income protection insurance offers to pay you a monthly benefit if you are unable to work for a certain period of time because of illness or injury.
Policies will insure you for up to a set percentage of your current regular income (commonly 75% of your gross salary), and for up to a certain length of time. In the event that you cannot work due to illness or injury, you can make a claim and your income protection insurance will “kick in” after a certain waiting period specified in the policy, e.g. 30 days. After the waiting period, the policy should pay you the agreed amount until you are able to return to work or for the agreed period of time – whichever is sooner.
Some companies will insure 75% of your total package including your usual superannuation contributions. Others will cover 75% of your salary and pay 100% of your usual super contributions into your super fund.
The table below shows some of our best income protection insurance options available for a non-smoking female aged 30-39 years old, who is working in an accountant role. This table is sorted by Star Rating (highest to lowest).
Click here for more information about income protection insurance, or compare your options using our website:
There are currently 31 direct life insurance providers and 13 advised life insurance providers compared and rated on the CANSTAR database – so your choice is certainly not limited.
How much life insurance do I need?
We have provided guidance on this question in this article, but you can also use our life insurance calculators to help you estimate your life insurance needs and the cover you may be eligible for, so that you have some idea of what to expect from your financial planner:
- Life Insurance Needs Calculator: Find out an estimate of how much insurance and income protection cover you may need in the event of a trauma, death, total and permanent disablement (TPD) or if you are unable to work.
- Income Protection Insurance Calculator: Find out an estimate of how much cover you may be able to apply for if you were unable to work due to illness or injury.
Ask your financial adviser about how you can get the right life insurance coverage for your situation and your budget. For our full list of life insurance company ratings, check out our interactive comparison table and select your occupation, age, gender, and the amount of cover you’re looking for.
To find out more about life insurance from a financial adviser and compare your options, read our annual Life Insurance Star Ratings report.