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Life and trauma insurance are a significant part of financial planning, offering protection against unforeseen events. A single, 25-year-old office worker with no dependants will have very different circumstances to a 50-year-old construction worker with a spouse and three children. Therefore, organising appropriate insurance cover that is in line with your budget and life circumstances, can provide personal security for yourself and family. Today, we will explore the different types of life and trauma insurance and highlight how a financial planner in Melbourne can help you navigate these options.

Understanding Life Insurance

Life insurance, also known as ‘life cover’, ‘death cover’ or ‘term life insurance’ provides a lump sum benefit to your beneficiaries in the event of your death or diagnosis of a terminal illness. Beneficiaries are nominated by you in your insurance policy and usually include family members such as a partner, spouse, parents, siblings, or dependants. This lump sum can be used to cover debts, funeral costs, and provide financial support to your family, ensuring their stability and security in your absence. If a beneficiary has not been selected by the insurance holder (you), it will be nominated by your superannuation trustee or estate.

Life insurance is usually available through your superannuation fund and may be activated by default as a monthly payment deducted from your account. However, it can also be organised through a financial planner, or directly through an insurance company. Policies can be arranged to be active for a select time; for example, 25 years whilst your children grow into adults, etc.

Understanding Trauma Insurance

Trauma insurance, also known as ‘critical illness insurance’, provides a lump sum payment upon the diagnosis of specified medical conditions, such as heart attack, cancer, or stroke, allowing policyholders to manage the financial impact of serious illnesses. This payment can be used to cover medical expenses, rehabilitation costs, and other financial burdens during recovery.

Usually, trauma insurance provides coverage independent of other life insurance policies. However, some insurance policies allow trauma insurance to be a packaged add-on to an existing life insurance policy. This option allows for comprehensive protection without purchasing multiple separate policies and can potentially reduce the overall cost for the coverage provided.

Income Protection Insurance

Income protection insurance is designed to replace up to 75% of your gross income if you are unable to work due to sickness or injury. This type of coverage helps maintain your standard of living by providing a regular monthly benefit, ensuring you can meet your financial obligations while focusing on recovery. This type of insurance is not designed to be a substitute for regular sick leave that is accrued through employment. Instead it is more for long-term, on-going sickness or injury that is keeping the policyholder out of work for an extended period.

Child Cover

Child trauma cover provides a lump sum payment for children between the ages of 2 and 15 upon the diagnosis of specified trauma events, such as cancer, paralysis, or severe burns. This coverage can be added to an adult’s trauma policy, offering financial support for medical treatments and care for your child during challenging times.

Total & Permanent Disablement (TPD) Insurance

TPD insurance provides a lump sum payment if you become totally and permanently disabled due to illness or injury, rendering you unable to return to regular employment. This coverage ensures financial stability by helping to cover medical expenses, rehabilitation costs, and ongoing living expenses.

Do You Need Life or Trauma Insurance?

Insurance needs vary greatly based on individual circumstances, such as income, debts, and family situations. Do you have dependants? Do you work in a risky environment? What would happen to your family financially if you permanently lost the ability to work?

A financial planner can assess these factors to determine the appropriate amount and types of coverage required. Regular annual reviews are essential to ensure that your insurance policies continue to meet your evolving needs. There are several strategies to make insurance more affordable and tax advantageous, and these can be discussed in detail with a member of our financial adviser team in Melbourne.

Do you need a financial planner in Melbourne?

Centre Of Wisdom provides you with a qualified financial planner for everything finance related. From life insurance to making sure your taxes are done correctly and on time, Centre of Wealth is a name you can trust.

Get in contact today via the contact page on our website! Or call either of our branches:

Upper Ferntree Gully: 03 9758 1202

Bentleigh East: 03 9570 4565