Please Help Me With My Insurance Options!


If this sounds like you don’t worry, you’re not alone!

I have mentioned on more than one occasion in previous articles the issues we are facing regarding under-insurance in this country.

There are a number of reasons why this problem exists, however a lack of understanding of your insurance options tends to be the main issue on why so few of us are properly protected financially.

I have always stressed that the better educated you are on this topic the greater the likelihood that adequate cover will be considered for both yourself & your family.

With this in mind I have provided some information below including a breakdown of the suitability of each cover based on your personal circumstances.

There are five main types of insurance cover available in the life insurance market.

They can be broken down further into ‘working’ & ‘non working’ insurance cover.  Working insurance cover includes income protection, Total & Permanent Disability (TPD) & business expense cover.

Non working insurance cover includes life & trauma (critical illness) cover.

As the name suggests, the three working insurance covers provide benefits if the insured is unable to work either temporarily or permanently due to illness or injury.

Life & trauma insurance on the other hand are not linked to your income or occupation as benefits are paid on a particular event occurring, ie death or serious illness.

Let’s now look into suitability of cover based on personal circumstances.

Life Insurance

Pays a tax free lump sum payment to the life insured’s beneficiaries.  Life insurance is suitable for anyone who has financial dependents.

This can include young children, a spouse or a business partner at work.  Basically anyone who would be disadvantaged financially on the death of the life insured.

Trauma insurance

Pays a tax free lump sum payment to the life insured on the diagnosis of a particular traumatic event.  Almost everyone would benefit from trauma insurance.

If you are the main income earner, whether you are single or married it is vital that you are covered.  A traumatic event would affect your ability to earn an income so how would your financial commitments be met?

A part time or non working spouse should also be covered.  If a serious illness occurred the main income earner may need to take time off work to assist or be with the children during the recovery phase.

The benefits received would allow adequate time away from work for the main income earner if needed.  As much as we don’t like to think about it, it is also important to consider trauma insurance for your children.

Once again the benefits received would allow the parents adequate time to be with their children when they need you the most!

Income protection insurance

Pays a regular monthly benefit if you are unable to work due to illness or injury.  You need to be working a minimum of 20 hours per week to qualify for the cover.

This cover obviously suits anyone who works & relies on their income to maintain their standard of living.  This applies to both employed & self employed workers, with the latter having a greater need for the cover due to their lack of entitlements.

If you are a blue collar worker, accident only income protection may also be suitable for you due to the physical nature of your job.

Total & Permanent Disability (TPD) insurance

Pays a tax free lump sum payment to the life insured if they are unable to ever work again due to illness or injury.  As with life insurance, TPD cover is extremely important for anyone with financial dependents.

In saying that the cover should also be considered for individuals who still need to meet their financial commitments & maintain their standard of living, should they lose their ability to earn an income.

Business expense insurance

Pays your fixed business expenses on a monthly basis if the insured is unable to work due to illness or injury.  This cover is suitable for sole traders or self employed business owners who still need to meet their fixed business expenses while they are unable to work.

Ideally, business expense cover & income protection cover should both be considered for self employed workers in order to meet all financial commitments whilst unable to work.

Hopefully this information has provided some clarity for you enabling you to prioritise your cover based on your individual circumstances.

If you have any further questions or require additional information, please don’t hesitate to contact me.




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Tom George
My role as a Life Risk Adviser involves educating, assisting and providing advice in the area of personal insurance. Follow me on Twitter | Linked In Profile

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