There are over ten different insurers in the market so it can be difficult for someone to know which policy to choose. There is advised insurance cover or direct insurance cover. This is a whole different conversation, however one thing to understand is that direct insurance is not underwritten at time of application. This means all pre-existing conditions are excluded and you could potentially be paying for something you could never use.

What things should you look for in a policy? Firstly, where possible applying for an Agreed Value policy over an Indemnity policy should always be considered. Agreed Value means that you demonstrate proof of income at the time of application rather than Indemnity where you need to prove income at time of claim. If your income should decline after application the sum insured (payout benefit) would not change with an Agreed Value policy.

The definition of disability is very important. To me what you should look for is a policy that offers three definitions of disability: hours based, earnings based, and duties based definitions. As long as you meet one definition you can make a successful claim.

Other useful features in a policy include claims indexation, which means in the event of claim the benefit amount rises with inflation. For the self-employed, you would look for a policy that would allow you to return to work without restarting the waiting period. Tradies could find the Specified Injury Benefit a worthwhile option.

A comprehensive policy will also include a partial disability benefit, which allows for payment even when you continue to work, however the injury or illness has resulted in a reduction of earnings, hours worked or duties performed.

Where possible you should apply for Trauma (Critical Illness) Cover as a separate policy. However, some people choose not to apply for Trauma Cover due to costs. If this is the case you should also look to apply for an Income Protection policy that will provide a payout on a Trauma event.  A comprehensive policy should provide a lump sum trauma payment of six times the monthly benefit amount. This amount is paid regardless if you continue to work and can be useful in funding medical costs after suffering a heat attack, cancer, stroke etc.

There are numerous other factors that can determine the most suitable policy and changes from occupation and personal circumstance. This is why when possible you should always seek advice from a professional.

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Thomas Jacks BCom (Acc), SMSF SpecialistTM, Adv. Dip F.S. (FP)
“I want to be able to assist clients with their investment and retirement planning by providing real strategy advice. It’s my aim to not only help my clients but to educate them by addressing the entire picture” Google Plus

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