Understand the different types of life insurance products available in Australia and how they can help protect you and your family.
Pays a lump sum to your beneficiaries following death (often including cases of terminal illness). This is what people traditionally think of as “life insurance” – providing for your family when you’re no longer there.
Life insurance is particularly important for anyone with dependants, including parents with children, primary income earners, and those with substantial debts that would be passed to family members.
TPD insurance provides a lump sum payment if you become totally and permanently disabled due to illness or injury, preventing you from working again in your usual occupation or any occupation.
TPD insurance can be based on “own occupation” (inability to work in your specific profession) or “any occupation” (inability to work in any job suited to your education, training or experience). Own occupation cover typically costs more but provides broader protection.
Replaces part of your income if you can’t work due to illness or injury. Unlike the one-time payouts of life or TPD insurance, income protection pays ongoing monthly payments (usually up to 70% of your pre-tax income) to substitute your salary.
Since October 2021, APRA regulations have changed income protection policies in Australia. New policies are limited to a maximum 90% of income for the first six months, then 70% thereafter. Policies are also now offered on an indemnity basis only, assessed at the time of claim.
Also known as critical illness insurance, trauma insurance provides a lump sum payment if you’re diagnosed with a specific serious illness or injury listed in your policy.
Trauma insurance can provide financial flexibility during a difficult time. The lump sum payment can be used for medical costs not covered by Medicare, to pay for specialised treatments, reduce work hours during recovery, or to pay for household help and childcare.
Business insurance protects businesses and their owners from financial losses due to the death or incapacity of key people or business partners.
Business insurance helps ensure business continuity, protect business value, and provide certainty for all stakeholders during challenging times. It can also form part of a complete succession planning strategy.
Compare the key features of different life insurance products to understand which might be most appropriate for your situation.
Insurance Type | Covers | Payment Type | Best For |
|---|---|---|---|
Life Insurance | Death or terminal illness | Lump Sum | Anyone with dependants or debts |
TPD Insurance | Permanent inability to work | Lump sum | People reliant on their ability to earn |
Income protection | Temporary inability to work | Monthly payments | Income earners, especially self-employed |
Trauma Insurance | Specific serious illnesses | Lump sum | Those wanting medical cost and gaps coverage |
Business Insurance | Business continuity risks | Varies by policy | Business owners and key employees |