Life insurance covers ensure that policy holders get many benefits; however the benefits that are offered to policy holders depend on the type of plan purchased.
- Term life insurance plans offer a onetime death benefit to the chosen beneficiaries. The insurer gives a lump sum payment to the beneficiaries of the policy holder’s estate when the policy holder passes away.
- Income insurance plans offer up to 75% of the policy holder’s income towards claim payments in case he is injured or ill temporarily due to which he is forced to take rest. These plans offer timely payments are given to the policy holder once a month when he files a claim that is accepted by the insurer. The total insured amount is tax deductible and buyers can enjoy tax concessions along with other tax benefits.
- Trauma insurance plans offer a onetime lump sum payment to the policy holder if he is diagnosed with either a critical illness or a terminal illness. Cancer, stroke, heart problems, some serious mental illnesses and other debilitating illnesses are covered by this plan. Injuries are not covered by this type of insurance plan.
- Total and permanent disability plans offer a onetime lump sum payment to the insured person if he injures himself significantly, loses one or both of his limbs or loses vision of one or both eyes. This type of plan is meant to ensure that the policy holder gets financial aid if he is permanently or totally disabled, so that he can run his household and pay outstanding bills if any.
- Personal accident covers offer compensation payments if the policy holder is injured as a result of an accident. The compensation payments will depend on the type of injury and effect of the injury on the policy holder’s life. For instance if the insured person cannot work temporarily due to a serious accident then he may get compensation payments until he can resume work. This type of cover does not offer protection against illnesses.
Additional Benefits Offered by Life Insurance in Australia
One or more of the following benefits may be offered to the policy holder for no additional cost. Day one claim benefits, indexation benefits and a few other benefits are considered as paid benefits and some insurers may require the buyer to pay a nominal fee for these perks.
- 24 Hour Worldwide Cover – Usually offered with income insurance plans and a few other types of life insurance plans. This cover protects the insured person even while he is out of his home country on work or for vacation.
- Indexation Benefit – Usually offered with income insurance plans and certain other types of life covers. This cover protects the insured person against inflation, since this benefit ensures that the value of the policy increases with inflation. the value of the policy is appraised periodically depending on the CPI index.
- Accommodation, Rehabilitation Expenses and Surgery benefits – These benefits are offered with income insurance plans along with a few other types of life insurance plans. The accommodation protects the policy holder by providing an additional payout in case a family member or friend needs accommodation to stay with the insured person while he is on leave due to health reasons. This benefit may also pay for lost wages of the family or friend if that person has to take leave to take care of the insured person. The rehabilitation expenses benefit protects the policy holder by ensuring that he gets access to rehabilitation such as physical therapy when he needs it after an injury. This benefit pays for the expenses of physical therapy and a few other types of rehabilitation therapies. The cosmetics and transplant surgery benefits ensure that the policy holder can have access to the medical care he needs, when he files a claim.
- Death Benefit – This benefit is offered as an additional benefit with income insurance plans, TPD plans and trauma insurance plans.
The Difference Between Death Covers & Income Insurance
- Term death covers offer a onetime payment only in the event of the policy holder’s death due to natural causes, illnesses or accidents. Some insurers may offer a part of the death compensation payment in advance to the beneficiaries of the estate if the policy holder opts for this perk. This advance payment is given for funeral expenses usually around the time a claim is filed.
- Income insurance plans offer re-occurring payments only when the policy holder is ill, injured and cannot perform his duties at work. The definition of the income cover will determine the final terms of the contract. To get the benefits offered by this type of plan, the policy holder has to file a claim only after the waiting period is over and before the benefit period is over.
The Difference Between Trauma and Total Permanent Disability Plans
- Trauma insurance plans offer a onetime payment only if the policy holder is diagnosed with a serious illness that he may not survive. The payout given for this type of cover is meant to keep the policy holder comfortable or to ensure that he pays off outstanding bills and debts before he passes away.
- Total and permanent disability plans offer a onetime payment if the policy holder is seriously injured and may not be able to walk or see again.
Important Info about Compensation Payouts for Life Insurance Plans
- The type of income insurance contract selected will determine the final payout given to the policy holder. In addition, the level of cover along with the premiums and definitions of the contract will determine the final payout the buyer gets.
- The type of injury sustained by the policy holder will determine the final payout for TPD covers. The type of illness sustained by the policy holder will determine the final payout for Trauma insurance plans.
- If the policy has any exceptions or limitations such as loading fees then these terms will be mentioned in the Product Disclosure Statement. This legal document will be given to the policy holder once he agrees to purchase a contract.