Personal life insurance is a risk mitigation tool used to protect your financial position through various types of policies, which include:

Life (or Term) Insurance

Pays a lump sum benefit if someone dies or is diagnosed with a terminal medical condition. Can help repay a mortgage, fund education expenses, pay living expenses, estate equalisation and pay for funeral arrangements.

Total and Permanent Disability

Pays a lump sum benefit if someone becomes totally and permanently disabled. ‘Total and Permanent Disablement’ is defined in the policy but usually involves being unable to ever work again or unable to perform household duties or unable to perform everyday activities such as eating, dressing or walking. Even if a person has income protection to keep up regular living expenses such as groceries, electricity etc, the lump sum benefit will help to pay for medical expenses, special aids or equipment, home alterations etc.

Income Protection

No doubt you’ve heard of someone who threw their back out, has undergone treatment for cancer, has been involved in a car accident or has had some other injury or illness that meant they couldn’t work for a period of time. Income protection can replace up to 80% of your income (including super contributions) so that you can still keep the household running, ensure loved ones are cared for and focus on recovering.

Trauma Insurance (or critical illness insurance)

This pays a lump sum if you suffer or are diagnosed with specific conditions listed on the policy. Conditions may include heart attack, cancer, stroke and degenerative diseases like Multiple Sclerosis and Motor Neurone Disease. You may have private health cover that can help pay for some of the costs, but there can be significant out of pocket medical expenses. In the preferred situation that the condition is not permanent, this benefit is aimed to give you (or your partner) breathing space to cut back work hours, access the best treatment available or take a well-deserved holiday to ensure recovery is as quick and complete as possible.

When assessing policies offered by different insurers it is very important to consider the quality of definitions, costs, features and exclusions. insurance can be very complex, but we can assist with determining:

• Appropriate types and levels of cover
• Best ownership structure for the policy – SMSF, Super, Personal, Joint, Business
• Policy features and options
• Stepped vs Level premiums
• Tax considerations – deductibility of premiums, tax on benefits
• Beneficiary nominations
• Estate Planning