Personal Insurance

Personal Insurance

1. Life/Death

   • A predetermined lump sum to be paid out to the beneficiaries of the insured's death.
   • Financially covers the retirement of any debt at the time of death, covers any family members for income generation or life style continuation
   • The older a person gets, the less need for death cover through natural cause or misadventure - this is because generally; the older a person gets, the less debt they will have
   • Calculation - Retire debt, provide for future events (education and lifestyle), cost of funeral cover, legal costs, final medical cost, any additional items LESS existing cover, existing savings (including super), saleable assets

2. Income Protection

   • Covers an insured's income in the event they are unable to work due to accident or illness
   • Calculation:- 75% of the insured's annual gross income paid out in monthly installments' PAYG
   • One who does not work more than 20 hours per week is unable to obtain income protection
   • A self employed person payment is based upon 2 years of tax returns- under two years classified as 'new in business' and is provided with a clause inserted
   • waiting period usually 30 days, this will pay up to the age provided by the policy - the default age is ususally 64
   • Tax deductible
   • FV = PV(1+i)^n up until the age of 65 i = infation

3. Trauma

   • A pre determined lump sum paid in the event of a designated medical trauma
   • Covers any medical costs, home, renovations, ongoing medical treatment as a result of the trauma, child and domestic support, retirement of debt, continuation of family lifestyle LESS Savings & Income support (Centrelink)
   • This does not cover accident injuries (generally) however, some policies will provide partial payments in the event of incapacitation through accident
   • Must survive the waiting period which is written in the policy a default period of 21 days

4. TPD

   • A predetermined lump sum where the insured is totally and permanently incapacitated through illness or injury and can not work in either their 'own' or 'any' occupation - depending on the policy
   • Any Occupation
     • If you have been absent from employment due to a particular condition (which has remained the same) or any sickness or injury which has remained the same for approx 3 months consecutively. Here you must not be able to complete ANY occupation, have had regular appointments and advice regarding this condition from a medical practitioner, and are likely to be disabled for life, then you are credible to receive a TPD payout.
   • Own occupation
     • If you have been absent from your OWN occupation due to a particular condition (which has remained the same) or any sickness or injury which has remained the same for approx 3 months consecutively. You continue to become absent from your own occupation as you are incapacitated are are not likely to ever engage in your own occupation ever again. You must also be receiving regular advice from a medical practitioner. Here you are likely to receive a TPD payment.
   • Calculation:- usually mirrors death cover although adds - retire debt, alterations to the house, ongoing medical costs, child support domestic support.