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‘Tis the season to review your life insurance policies and be prepared for the holidays!

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Summer is here and excitement is buzzing for those getting set to travel and visit family and friends. The last thing you are probably thinking about when you are enjoying your downtime is whether or not your insurance policies are up to scratch. Attwood Marshall Lawyers Compensation Law Senior Paralegal, Amy Lewis, discusses the importance of reviewing your life insurance as frequently as you do your car and home insurance, particularly when you are getting ready to set off on your next adventure.

Introduction

Most people have insurance for their home, contents, car, and even take out travel insurance. However, they often forget to review their life insurance policies. You wouldn’t drive a car uninsured, so why would you risk your financial security in case of the unfortunate and unexpected happening?

With the holiday season here, this is a great time to ensure your life insurance requirements are adequately met.

During this time, there’s generally a significant increase in accidents and visits to hospital emergency rooms. This increase is not just the result of more people being involved in car accidents, but also injuries from water and leisure activities, intoxication and even incidents involving ladders and home decorating/maintenance tasks which have gone terribly wrong.

When you injure yourself at work, there is a certain level of protection provided by workers’ compensation schemes, however if you were to injure yourself over the holiday period, you need to ensure you protect your financial security and have the appropriate insurance cover.

Read more: When was the last time you reviewed your superannuation insurance policies?

Life insurance can be broken down into four main categories

Income Protection (also known as salary continuance)

If you are injured or suffering from illness and unable to work temporarily, income protection usually covers your income up to 75% of your pre-injury salary.  Unlike workers’ compensation insurance, your injury or illness which prevents you from working does not need to be sustained during your employment.

Income protection insurance can be held through your superannuation fund or directly through an insurer. If you do opt to hold insurance directly with an insurer and pay premiums from your salary, these premiums can be claimed as a tax deduction.

Things to look out for when reviewing your income protection policy:

  • Waiting period: Are you able to survive without an income for the length of your waiting period?  The waiting period varies on each policy and you can choose a waiting period anywhere from 14 days up to three months. The longer the waiting period, the cheaper the premium.
  • Benefit period: This is the length of time you will receive income protection benefits providing you continue to remain unable to work.  Benefit periods range from six months all the way up to the age of 65.
  • Monthly insured amount: Does the monthly insured amount accurately represent your salary and requirements?

These three components can affect your insurance premium. To ensure your financial needs are adequately met and suit your budget, it is recommended you seek the assistance of an experienced and reputable financial advisor when selecting a policy to suit your individual needs.

Total and Permanent Disablement (TPD)

If you are injured or suffering from an illness and it is unlikely you will ever be able to return to the workforce, TPD insurance can provide a lump sum benefit to assist with ongoing expenses and the loss of income.  The injury or illness that has impacted your ability to work does not need to be workplace related.

When taking out a TPD policy, it is important you understand the definition within your policy and that your insured amount meets your needs.  Some policies include clauses relating to employment status (casual, part-time or full-time) and have minimum working hours required.

It is very important to ensure your policy suits your situation. If you hold a policy that requires you to be employed full-time and you only work casually, this could mean you are ineligible to make a claim in the event you need these benefits.

Once again, you should obtain the advice of an experienced and reputable Financial Planner or insurance broker in this area to ensure the policy you take out is a match with your circumstances.

Read more: Watch out for TPD definitions

Trauma

Trauma insurance provides protection when you suffer from a particular illness.  For example, if you suffer a stroke, heart attack or develop cancer, a trauma policy will pay out a specified lump sum amount depending upon the illness. Trauma works slightly differently from income protection and TPD insurance whereby you do not have to be off work in order to make a claim.  Trauma cover simply pays you a benefit if you suffer from an insured event which is usually based upon the type of illness or injury suffered.

Trauma cover is not available through superannuation and must be taken out directly with an insurer.

Again, there are definitions of the illnesses or injuries suffered which you must satisfy to qualify for a payment as well as certain exclusions. It is best to get advice on any cover taken out so you clearly understand what you are covered for (and more importantly, what you are not covered for!).

Life

With some superannuation funds, life insurance (also known as life assurance or death insurance) can be paid out early under “terminal illness” conditions.  That is, if you are diagnosed with a terminal illness and your prognosis is that you will live for less than 24 months, most insurers will pay out your full lump sum life insurance early. These funds can help you seek alternative treatment or simply can be used to enjoy the rest of your days with your loved ones.

Life insurance can be held through superannuation or with an insurer directly. Again, it is always important that your insured amount meets your personal needs.

Life insurance provides you peace of mind if you were to pass away unexpectedly and would provide ongoing support for your spouse and children or other dependant family members.

Read more: Superannuation insurance benefits can be paid early if you are terminally ill

How can Attwood Marshall Lawyers help?

Take the time these holidays to make sure you are protected with appropriate insurance cover.

In the unfortunate event you have an injury or illness and need to make a claim, it is always best to seek the right advice.  Many of our clients have tried to lodge superannuation and insurance claims themselves or have allowed their financial planner or insurance agent to assist. It is very important that you engage experienced lawyers in this area, as you only have a limited time and ‘one crack’ at the policy payment. Sometimes, mistakes are made in the application which can delay or even compromise your payment. Please make sure you get the right advice – we’re here to help. The last thing you need at such a stressful time in your life is to be worrying about legal technicalities and paperwork required by insurance companies!

We offer a free initial assessment of your policies and your prospects of bringing a claim or claims. We accept most cases on a no-win no-fee basis and our costs are payable only if your claim succeeds.

It is our intent to help people suffering serious illness or injury through these stressful times and give you and your family peace of mind. If you would like assistance to help access your entitlements through superannuation, contact Compensation Law Department Manager, Kelli Costin, on 07 5506 8220 or email kcostin@attwoodmarshall.com.au for your free initial appointment.

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