#3 The ins & outs of Life Insurance

Insurance 101-What is disability insurance?

Disability Income or Income Protection cover

This insurance pays a percentage of your income if you need to claim because you ill, injured, and unable to work. Take care with definitions – they’re important.  

Total and Permanent Disability cover

Often referred to as TPD, this cover is a lump sum payable after 3 or 6 months if you are totally and permanently disabled, e.g. unlikely to ever return to work or duties. There are two types, Any Occupation and Own Occupation and as with Income Protection cover, care is required around policy definitions.  

Mortgage Repayment cover

These are especially designed around mortgages. All of the above covers can be selected/combined into one policy. Unlike Disability Income policies, the percentage paid is related to your mortgage payment(s), not your income.  

Your income is your greatest asset

Did you realise this? The ability to earn a living is far and away your largest asset to maintain your present lifestyle.

How long would you be able to make your payments for rent or mortgage, buy groceries, pay back a credit card, etc.? When you think about it, and do the numbers, you are an income producing ‘machine’ and over your lifetime, you will earn a small fortune. It makes sense to protect your most valuable asset. That’s where Disability Income Insurance comes in; think of it as insurance for you salary. 98% of us insure our homes and 95% our cars, yet they are not as valuable as you!