What is a Personal Protection Package?
Personal insurance is unique, because it is personal. It is not general insurance such as health, home, car insurance or business public liability insurance.
Personal Protection Packages help to ensure that your financial life is not impacted in the event of something happening.
These are the types of cover that are typically part of a Personal Protection Package.
Income Protection (Salary Continuance) – Ensures you maintain your income and lifestyle.
- Replaces up to 75% of your income if you are unable to work due to sickness or accident.
- Premiums are tax deductible.
- Cost is influenced by such things as waiting period and the benefit payment period, type of work you do, if you have had any health problems and if you are a smoker.
Some Terms you need to know:
Waiting Period – This is how long you need to be off work before you become eligible to make a claim.
Benefit Period – This is the maximum time the benefit will be paid for if you are seriously incapacitated and unable to return to work.
Increasing Claim – This means your monthly benefit when on claim increases in line with inflation.
Indemnity Policy – You have to prove you are earning the insured level of income when you make a claim.
Remember as well that Work cover and TAC payments only cover you if you are injured during the course of your work or in a car accident. An Income Protection package covers you against any medical condition that might keep you off work, regardless of where or when it occurs.
Trauma Protection (Crisis or Critical Illness) – Relieves financial stress.
It is a fact that many people don’t die quickly, instead they are often left with an illness or injury that can last for years. This type of package provides a lump sum payment if you aver suffer things such as:
- Heart Attack
- Coronary bypass
and a range of other medical conditions.
A Trauma package will be influenced by things such as your occupation and any health issues you may have had.
Life Protection – Ensures your loved ones are taken care of.
Life protection is really fairly simple. A payout is made if you pass away or diagnosed as terminal.
This package is not for you, it is for your family and loved ones. It is one thing you can do to make sure that their grief is not compounded by financial worries.
Total and Permanent Disablement Package (TPD) – Helps to relive financial stress.
A TPD package provides a lump sum payment if you suffer a disability that stops you from ever working again.
You may wonder what the difference is between a TPD package and a Trauma package. A trauma package is paid on diagnosis and is not linked your future health. By definition TPD needs to be permanent.
What would you want?
When considering which type of package and the level of cover you need in each one think about the following:
- Would you want all debt paid out?
- Would you want to have to sell assets, maybe even the family home if something happened?
- Do you have people who rely on your income?
- Would you want the financial burden to fall onto your family?
It is a true fact of life that many people either have no protection packages at all or have no idea if they do.
A simple no obligation consult can make sure that you become aware of just where you stand and that you and your loved ones are in good shape.
Some level of cover is better than no cover at all.
This information is of a general nature only and is not intended to constitute personal advice. It does not take into account your particular investment objectives, financial situation or needs and, accordingly, you should consider the appropriateness of this information in light of your own circumstances. We recommend that you obtain professional advice before undertaking financial transactions.
Graham Chatterton is an Authorised Representative of:
Consilium Advice Pty Ltd ABN 86 158 826 647
Australian Financial Services Licence No. 424974
Level 11 37 Bligh Street SYDNEY NSW 2000
T: 02 8003 5111