How living insurance works

How living insurance


 Living insurance (also known as trauma insurance) is designed to pay you a certain amount if you are diagnosed with a potentially fatal illness, or experience any kind of trauma. The benefit may be payable if you are suffering from a specific medical condition.


How life insurance works

If you are diagnosed with a serious illness such as cancer, your private health insurance or public hospital system may cover some of your medical expenses.

However, in many cases your treatment may require a long-term procedure before you return to work. As a result, this can put significant financial strain on you and your family being able to cover day-to-day expenses. Getting a large sum from your insurance can help relieve this pressure.

Life insurance benefits

Simultaneous exemption from capital gains tax

One of the major benefits of Living Insurance is that it enables you to receive a unit amount against the regular monthly income flow you receive through income protection insurance.

If you insure individually, the unit amount will be exempt from capital gains tax. It also means that you don't usually need to include a lump sum in your assessable income for tax purposes.

Can be covered for a range of conditions depending on the policy

The range of conditions covered under life insurance includes heart attack and other organ disorders, major head trauma, loss of speech and degenerative diseases such as multiple sclerosis and Parkinson's.

Ability to change the amount of your cover

You have the option to apply for additional cover when certain events occur without providing any additional medical evidence.

There are no restrictions on how you use your money

The amount you receive from your living insurance can be used for whatever purpose you think is appropriate, whether it is to pay off debt yourself, pay for your medical expenses or take leave, the choice is yours.

Disadvantages of life insurance

You must avoid illness for a certain period of time to make a claim

One of the major drawbacks of living insurance is that you have to avoid illness for a certain period of time to get paid. This period can range from two weeks to one month from the time your first diagnosis was made, depending on your policy and the insurer.

Not accessible by super

While you can access a wide range of insurance through your super, Living Insurance is not one of them. This means that you will not be able to access some of the benefits insured through super offers such as tax breaks.

You must have your policy to make a claim

In some cases, you can only claim if you have your insurance policy for a certain period of time. This is usually 90 days from the time you buy your policy.

Decide on the level of your cover

If you have decided to take out Living Insurance, talking to a financial advisor can help you decide which policy is best and the level of cover you need.

If you choose to carry out this procedure yourself, think about how your family will cope if you are diagnosed with a serious illness and how much money you need to receive. There is an insurance calculator that can help you determine this.

Bottom line: Living insurance can help alleviate financial anxiety if you get too sick to work or have to pay a medical bill. While your combined payments can be used as you wish, there are some drawbacks so it may be worthwhile to talk to a financial advisor to make sure your policy meets your needs.

source by inly information purpus.

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