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Types of Life Insurance Cover in Australia

Life insurance is not one-size-fits-all. There are four distinct types of cover, each designed to protect you and your family in different circumstances. Understanding what each one does - and how much you might need - is the first step toward real peace of mind.

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Life Cover (Death Cover)

What it does

Pays a lump sum to your beneficiaries following your death or diagnosis of a terminal illness. This money helps your family maintain their lifestyle, pay off debts, and secure their future without your income.

Do I need it?

  • Does anyone depend on your income - a partner, children, or ageing parents?
  • Do you have a mortgage, car loans, or other debts that would burden your family?
  • Could your family maintain their lifestyle if your income suddenly stopped?
  • Have you considered the cost of your children's education through to university?

How much do I need?

  • Outstanding debts: mortgage balance, car loans, personal loans, credit cards
  • Income replacement: 8-12x your annual income for young families
  • Children's education: $25,000-$50,000 per child through to university
  • Funeral and final expenses: $15,000-$25,000

Example

An indicative calculation might combine outstanding debts, a multiple of annual income for income replacement, future education costs and final expenses. The right total varies based on individual circumstances.

Learn more about Life Cover

Total Permanent Disability (TPD) Insurance

What it does

Pays a lump sum if you become totally and permanently disabled and are unlikely to ever work again. This covers the significant costs of adapting your life when you can no longer earn an income.

Do I need it?

  • If you were permanently injured, could you afford ongoing medical and rehabilitation costs?
  • Would your home need modifications - ramps, bathroom changes, or specialised equipment?
  • How would you cover day-to-day living expenses without any income?
  • Do you have enough savings or super to support you for decades?

How much do I need?

  • Medical and rehabilitation costs: ongoing therapy, specialist appointments, medication
  • Home and vehicle modifications: ramps, bathroom alterations, wheelchair-accessible vehicles
  • Living expenses: enough to cover daily costs for the rest of your life
  • Debt clearance: mortgage, loans, and any outstanding financial obligations

Example

Total Permanent Disability (TPD) cover is generally chosen to fund the costs of living, ongoing care, home modifications and debt clearance over the long term. Appropriate levels vary by circumstance.

Learn more about Total Permanent Disability

Income Protection

What it does

Replaces up to 70% of your pre-tax income if you cannot work due to illness or injury. Unlike lump-sum policies, income protection pays you a regular monthly benefit - like a salary - so you can focus on recovery.

Do I need it?

  • Could you pay your bills if you were off work for 3 months? 12 months? 5 years?
  • Do you have enough sick leave or savings to cover an extended absence?
  • Would your family need to make drastic lifestyle changes if your income paused?
  • Are you self-employed or a contractor without employer-provided sick leave?

How much do I need?

  • Benefit amount: up to 70% of your pre-tax income (e.g., $5,833/month on a $100,000 salary)
  • Waiting period: choose from 14 days, 30 days, 90 days, or up to 2 years (longer waits = lower premiums)
  • Benefit period: 2 years, 5 years, or to age 65 (longer periods = more comprehensive cover)
  • Tax-deductible: premiums paid outside super are generally tax-deductible

Example

Income protection is typically structured to replace a portion of your pre-tax income (often up to around 70%) for a chosen benefit period after a chosen waiting period. The right structure depends on individual circumstances.

Learn more about Income Protection

Trauma Insurance (Critical Illness)

What it does

Pays a lump sum if you are diagnosed with a specified critical illness - such as cancer, heart attack, or stroke. The payment is made regardless of whether you can still work, giving you freedom to focus on treatment and recovery.

Do I need it?

  • Could you afford the best treatment if diagnosed with cancer or a heart condition?
  • Would you want the option to take extended time off work to focus on recovery?
  • Do you have a family history of heart disease, cancer, or stroke?
  • Could you cover travel costs for specialist treatment interstate or overseas?

How much do I need?

  • Typical cover: $200,000-$500,000 lump sum
  • Treatment costs: experimental treatments, private hospital, specialist oncologists
  • Time off work: covers income while you step away from work to recover
  • Lifestyle adjustments: dietary changes, home help, reduced work hours during recovery

Example

A trauma lump sum can be used to cover treatment costs, time off work, travel for specialist care, or other expenses associated with a serious diagnosis. Appropriate cover levels vary by circumstance.

Learn more about Trauma Insurance

Child Cover

An optional extra that provides a benefit if your child suffers a serious illness or condition. Child cover automatically converts to full adult cover when your child turns 21-25 (depending on the insurer), without any medical assessments. It's a way to lock in their insurability while they're young and healthy.

All Four Types Work Together

Each type of cover protects you in a different scenario. Life cover protects your family if you pass away. Total Permanent Disability (TPD) covers you if you can never work again. Income protection replaces your salary while you recover. Trauma gives you a lump sum on diagnosis, even if you can still work. Together, they form a comprehensive safety net - and we can help you find the right combination for your situation.

Life Cover

Total Permanent Disability

Income Protection

Trauma Insurance

Not Sure What You Need?

That's completely normal - and exactly why we're here. Book a free, no-obligation call and we'll help you work out the right cover for your life, your family, and your budget.

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