In Australia, life insurance describes a variety of policies that a person buys into that can provide for them and their family in the event that a catastrophe, such as death or a serious injury or illness occurs. These schemes are paid into by the policyholder over an extended period of time before being paid out in the event of a death or injury. In many cases, life insurance is offered as part of a superannuation scheme, however this is not always the case.
Some of the most common life insurance offerings in Australia, according to the government’s Moneysmart programme, include:
- Income protection insurance: This program pays out a large portion — sometimes up to 85% — of your income in the event that you become seriously injured or ill and are unable to work for an extended period of time. This type of policy can be made comprehensive along with other policies, such as total or permanent disability or trauma insurance, and is most often held by self-employed individuals, who don’t have guaranteed sick days through an employer.
- Life cover: Perhaps the policy type most commonly associated with life insurance, life cover pays out a lump sum to a person’s beneficiaries, typically their spouse and children. In some rare cases, a life cover payout may happen while the policyholder is still alive if they have been diagnosed with a terminal illness. If you don’t have anyone who depends on you financially, a life cover policy may not be necessary.
- Total and permanent disability insurance: Total and permanent disability, or TDP, is a term for an injury or illness that will keep you from ever returning to a full work schedule. TDP insurance pays out in the form of a lump sum and is meant to cover needs like current and future medical expenses, as well as any major debts, such as a mortgage.
- Trauma insurance: Trauma insurance, also known as critical illness insurance, pays the policyholder a lump sum in situations where a serious illness or medical emergencies, such as a heart attack, stroke, major brain injury or cancer, prevents them from working. Trauma insurance is meant to cover medical expenses, including both immediate care and long-term costs, like physical therapy or a care facility.
The process for filing a life insurance claim will vary depending on whether your policy was bought through an insurance company, super fund or arrangement with your employer. In every case, it’s important to gather any pertinent documents that can demonstrate the legitimacy of your illness or injury and its impact. Potential examples include medical reports from a doctor, a death certificate or information about your work hours.
While the reasons that a claim would be made and accepted may seem clear, insurance companies continually find ways to reject, dispute or minimise life insurance compensation to their policyholders. Many life insurance policies include provisions that specify some forms of injury, illness or causes of death that aren’t eligible. An insurance company may also refuse to make payouts that fall below a certain balance. Before signing any life insurance agreement, it’s important to read over the policy carefully and make sure it covers your situation. A life insurance dispute lawyer can help to translate the fine print of a policy and be your advocate if a claim is rejected and help you to get the compensation you deserve.
