How does life insurance work?

A step-by-step guide to help you though the decision-making process

Firstly, what is life insurance?

“Life insurance” is the general term we give to the range of insurance that looks after you if something unexpected happens to your body or mind.   

They are designed to protect your quality of life and the future you’ve planned for your loved ones.  

The category of life insurance includes: 

• Life Insurance (sometimes called term life insurance or death cover) 
• Total and Permanent Disability Insurance
• Critical Illness or Trauma Insurance, and
• Income Protection Insurance.

Step 1. Which type of insurance do you need?

Each insurance protects your life in a different way. So the first thing to consider is, which types of insurance do you need to help you live the life you’ve planned? 

• Life Insurance: If you want to protect your family’s future and give them options if you die or are diagnosed with a terminal illness, then that’s Life Insurance.
• Total and Permanent Disability Insurance: To help you live a better quality of life if you become permanently disabled and can’t work again, then Total and Permanent Disability (TPD) Insurance could be for you.
• Critical Illness or Trauma Insurance: If you have a serious illness that's covered by the policy, like certain malignant cancers, then Critical Illness or Trauma Insurance helps support you while you recover.  
• Income Protection Insurance: If you want to have an income to pay your living expenses, if you can’t work as the result of an illness or injury, then that’s what Income Protection Insurance is for.  

Step 2. How much do you want to be insured for?

Everyone’s life and budget is different. So considering how much you want to be insured for is an important step. 

Life Insurance cover, TPD and Critical Illness or Trauma Insurance are paid as lump-sums.

Income Protection Insurance is a monthly payment if you can’t work as a result of injury or illness. 

Step 3. If you choose Income Protection Insurance, how long do you want your Waiting and Benefit Periods?

A Waiting Period is the length of time you have to wait after an injury or illness that stops you from working, before you start accruing Income Protection Insurance benefits. It could be 4, 6, 13 or 26 weeks (shorter Waiting Periods generally cost more in premiums.)  

A Benefit Period is the maximum length of time you could receive your Income Protection Insurance payments. (The longer your Benefit Period the higher your premium.) 

Step 4. Enjoy This Australian Life

The most important question to ask yourself is, how will life insurance help you protect those you love or assist your return to wellness, so you can continue to make the most of This Australian Life?

Disclaimer

The health and financial information contained in this blog post is not a substitute for advice from a qualified medical or other health professional or a financial adviser. It is not intended to diagnose, treat, cure or prevent any health problem. Always consult your medical practitioner or other health professional in relation to any medical issue or concern The information in this blog post is of a general nature only and does not take into account your individual needs, objectives or financial situation. Before making any decision about a life insurance product you should consider the relevant Product Disclosure Statement and seek professional advice before deciding whether it is suitable for you. You can also get a copy of any relevant target market determination. This blog post has been prepared by TAL Life Limited ABN 70 050 109 450, AFSL 237848, an issuer of life insurance.

While all care has been taken to ensure that the information provided is accurate and complete at the date of publication, neither TAL Life nor its employees accept liability for any loss or damage caused as a result of any use of or reliance on the information.

Links from this blog post to pages on any other third party website are provided for your convenience only and do not constitute a recommendation or endorsement by TAL of the content of those pages. Use of these links is at your own risk. TAL does not control and is not responsible for any information or material found on those linked pages, or any website of which they form a part.