What Is Life Insurance & The Types of Life Insurance
What is life insurance?
Life insurance protects you or your family from financial difficulty after an unexpected event, like an illness, injury or death.
A known as term life, it is a product that pays out a sum of money to your beneficiaries in the event that any of the above incur. You can decide who your beneficiaries are. You may decided to leave it to your spouse, children or a close family friend. These funds can be used to help your family pay off debts, send your kids to school, or act as additional savings for your partner’s retirement.
You sign an agreement when you take out life insurance and pay a fixed monthly premium.
Life insurance premiums are different for every person. They are calculated based on your health, how you decide to structure your premiums, and much more. The professionals recommend you need 10 times what you would typically earn in a year.
Many working Australians have some life and disability insurance with their superannuation.
Types Of Life Insurance
Life Insurance Policy
A life insurance policy pays out a benefit to your family if the worst were to happen. Most Australians take out term life policies when they first have kids, and it’s important that they seek the right amount of cover.
Income protection pays regular (e.g. monthly) cash amounts of up to 75% of your income (salary + superannuation contribution) while you make a recovery from serious illness or injury. It’s invaluable cover for anyone who relies on a regular income.
Trauma cover provides cover for those diagnosed with a certain illness that has a significant impact on your life, such as cancer or a stroke. Also known as ‘critical illness cover’ or ‘recovery insurance’, it helps pay for medical treatment and regular expenses.
You can get an insurance policy to help with the expenses of your funeral. Check out our article about Funeral Planning for more in-depth info
If you are trying to decide on a policy, head to Compare the Market to choose the right one for you
For additional expenses that your life insurance doesn’t cover, apply for a hassle-free, affordable loan with us