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Insurance Glossary

Income Protection: Like the name implies, income protection insurance will provide you with a percentage of your usual income if you become disabled for a long period of time. You choose the premium you pay by selecting the amount of time you have to wait for benefits once you are disabled and also the length of time you will be eligible to receive the benefits. The sooner you are eligible and the longer you are eligible, the more you can expect to pay in premiums.

Mortgage Protection: Similar to income protection, mortgage protection will cover your mortgage payments in case of a long-term disability.

Term Life Insurance: When most people speak of life insurance in Australia, this is what they are referring to. This insurance makes a lump sum payout to your estate when you die. Many policies will make the death benefit payout if you are diagnosed with a terminal illness in lieu of death.

Total and Permanent Disablement Insurance: Usually not a stand alone policy, although it can be, TPD works in conjunction with your life insurance policy and makes a lump sum payment in the event you become totally and permanently disabled.

Trauma Insurance: This cover kicks in when you suffer one of the pre-defined conditions in the policy, such as cancer, heart attack or stroke. The more expensive policies will cover more health conditions than the basic policy that is often bundled with life insurance policies.

Whole Life Insurance: Fairly uncommon today and no longer available in Australia, whole life combines a death payout with some sort of savings vehicle. The savings plans often under perform other investment options and can make the agent/company a small fortune in fees.

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Income protection is a crucial part of any comprehensive financial plan. If you’d like some help customising the correct policy for you, or want to know more about the income protection insurance benefits.