7 little-known insurance benefits to get familiar with

7 little-known insurance benefits to get familiar with

When you first set up your policies everything is new and you’ve just been through a fairly rigorous exercise with your adviser in understanding your portfolio and why you have various policies, how you can claim on them and what they actually are.

Over time we all tend to forget what they do and generally don’t pay attention to all the little nuances that come with them. It’s not until annual review time when we discuss your policies with you and how you’ve been that we may uncover opportunities for claiming or be able to discuss policy specifics so we thought we’d explore today a few benefits and choices that you may have under your policies that you didn’t know about, and revisit what all the policies do at the same time.

Life Insurance

  • What is it: the insured person has passed away. You would have life insurance to ensure your family is looked after and doesn’t have to worry about paying the mortgage or bills whilst they get back on their feet during a difficult time.


A couple of extra benefits that a lot of people don’t know exist under life insurance are:

  1. Funeral expenses benefit: this means that the life insurance company will advance pay you up to $25,000 to pay for the costs of a funeral before the actual life insurance claim is processed in full. This is really helpful in alleviating immediate financial stress often created by funeral costs.
  2. Financial planning benefit: the insurer will pay up to $5,000 extra on top of any claim proceeds for you to receive proper financial advice as to what to do with the life insurance payout.


Income Protection

  • What is it: will replace your income if you can’t work due to any sickness or injury. It means you can pay the bills, put food on the table and survive whilst you recover, stress-free. Absolutely vital for anyone who relies on their income!


A couple of extra benefits that a lot of people don’t know exist under Income Protection are:

  1. Specific injury benefit: we see so many claims on this benefit! It says that if you break a bone that is listed on the policy then any waiting period is waived and you are paid a lump sum upfront reflective of the bone. For example, if you are insured for $5,000 per month Income Protection and fracture your elbow, which is listed as worth 2 months payment, you will be paid $10,000 in one hit without serving any waiting periods.
  2. Specific illness benefit: in a similar vein to the example above, this benefit says that you’ve been diagnosed with one of the specifically listed illnesses on the policy such as cancer, so no waiting period is served and you will receive 6 months income protection upfront as a lump sum. In this case, a monthly benefit of $5,000 would be paid to you as $30,000 upfront.


Total & Permanent Disability Cover (TPD)

  • What is it: You are totally and permanently disabled and not able to work ever again. An example might be becoming a quadriplegic as a result of a car accident. You need a reasonable amount of capital to set you up financially for the rest of your life to pay for all the costs associated with your health and wellbeing situation. This is a life-changing situation, and needs to be funded as such.


An extra benefit that people don’t know exists under TPD is:

  1. Buy-back option: TPD is often linked to life insurance as the financial ramifications of becoming totally and permanently disabled are often similar (but usually worse) than passing away. As a result, TPD is often linked to life cover to reduce costs. This means if you claim on TPD cover your life cover will reduce by the amount of TPD claimed and you might not get the lost life cover back. The buy-back option means you can opt to get the lost life cover back with no consideration of your changed medical history.


Trauma Cover

  • What is it: This type of sickness and accident cover is a bit more ‘positive’ than the others, as it posits that you’ve been diagnosed with a specifically listed condition such as cancer, heart attack or stroke, and those illnesses are likely to knock you about for a couple of years but the point is to take the money from the claim, remove yourself from financial stress and concentrate on recovering. It’s designed to provide for a short-term situation and only designed to provide financial funding for a couple of years until you recover.


A couple of extra benefits that you might not know about under Trauma cover:

  1. Partial claim: This means that in the event you suffer from a condition that does not qualify for a total 100% claim but is still a positive diagnosis of a serious medical condition, you will be paid a partial amount of your sum insured. A common example are low-grade cancers such as low-grade melanomas, low-grade cervical and low-grade prostate cancers. They’re not going to be as bad medically as full cancer but may still require some surgery, hospitalisation or medical attention.
  2. Trauma reinstatement: this is a valuable benefit because it means that you have made a full 100% claim on your Trauma cover but can actually get it back, without any penalty such as increased premiums due to a change in medical history. This is amazing because generally after claiming on Trauma cover a person becomes uninsurable, so to be able to get it back (minus further cover for the condition you claimed on) is a huge benefit. For example, you could make a full claim for cancer, reinstate your policy and then 3 years later be unlucky enough to have an unrelated heart attack and you can claim again!


If you think you may qualify for any of the above benefits, especially around the Income Protection benefits please contact us! If you would like more information about what your specific policy may cover you for please contact us.


This information, and any advice provided is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore you should consider its appropriateness having regard to these factors before acting on it.

Sacha Loutkovsky
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