iselect Life Insurance Glossary & Reference Guide

Transcription

1 iselect Life Insurance Glossary & Reference Guide

2 Types of Insurance Cover: Term Life Insurance: Life cover can help your family cope financially in the event of your death. Life Insurance typically pays a lump sum if you die or are diagnosed with a terminal illness and have 12 months or less to live. Total & Permanent Disability (TPD) Insurance: TPD cover provides a level of financial security to you if you are unable to work due to long term illness or injury. TPD insurance pays a lump sum should you be unable to ever work again due to total and permanent disablement. Trauma Insurance: Trauma cover provides funds to assist in meeting medical and other costs that can arise should you suffer a specific trauma. Trauma cover pays a lump sum should you suffer a serious illness such as a heart attack, cancer, stroke or any other specified medical conditions covered by the nominated insurer. Income Protection: Income Protection cover provides up to 75% of your regular income paid as a monthly benefit should you be unable to work due to an illness or injury. Your income is defined as earnings before tax after any business expenses. The waiting period is the period of time between the date you cease work due to illness or an injury occurs and the date the benefits become payable. The benefit period is the maximum period of time benefits will be payable while you are unable to work. These options allow you to complement any existing benefits you have such as your employer s sick leave and/or existing cover held under your employer superannuation fund. Child Trauma: This option enables you to insure your child in the event they die, are diagnosed with a terminal illness or suffer from one of the listed trauma events covered by the insurance provider. Accident Only Life Insurance: Accident Only Life Insurance provides a lump sum amount to your nominated beneficiary or estate in the event of your death by accident. An accident is defined as death resulting from a physical injury which is caused solely and directly by violent, external and unexpected means that is not traceable, even indirectly, to your state of mental or physical health before the event. Accident Only Income Protection: This benefit is specifically designed to protect you in the event you are unable to perform the main duties of your occupation as a result of an accident. Income Protection provides a monthly payment and the maximum cover allowable is typically 75% of your earnings before tax and any business expenses. Business Expenses: This type of benefit is specifically designed for self-employed individuals who need to ensure that the fixed expenses of their business or practice will still be paid even if they cannot work due to illness or injury. Fixed expenses relate to the regular normal operating expenses of your business or practice. Some expenses covered by this type of insurance include but are not limited to: Accounting & audit fees Electricity, gas, telephone and cleaning costs Rent Fees for professional associations Business related insurance premiums Salaries for non-income generating employees of your business Version Page 2 of 6

3 Important Note Please note that the information provided in this document is not specific to all insurance policies. The actual policy definitions and explanations may vary depending on the policy you choose to proceed with. You will need to refer to the relevant Insurer s Product Disclosure Statement for the specific policy wording and definitions to determine whether these policy options are suitable to you. Please note this information is general advice only and does not take into account your objectives, financial situation or needs and does not constitute personal financial advice. You should consider the appropriateness of this information to your circumstances before acting upon it. Options for Insurance Stepped vs Level vs Optimum Premiums: Stepped Premiums: Your premiums will increase at each policy anniversary in line with your age and CPI indexation until the benefit expiry date. Stepped premiums are a more cost-effective option if you intend on holding your insurance policy for the short term only. Level Premiums: Your premiums are not affected by your age and will only increase at each policy anniversary in line with CPI indexation generally up to your 65th birthday. After this time your premiums will continue on a stepped basis until the benefit expiry date. Level premiums are a more cost effective option if you intend on holding your insurance policy for an extended period of time. Waiver of Premium The waiver of premium benefit will waive your premiums for specified benefits generally to the age of 65 or 70 (depending on your occupation) if you become permanently disabled. CPI Indexation The sum insured of your benefit will automatically increase each year generally by the higher of the CPI increase or 5%. This means that your level of cover will retain its value in future years. Total & Permanent Disablement Cover Occupation definition: Own Occupation: To be considered totally and permanently disabled means that: 2 You generally have been absent from work for a minimum of 3-6 consecutive months (depending on the insurance provider) and a medical practitioner has determined that you are incapacitated to such an extent as to be unable to engage in your own occupation, or 3 You have suffered loss of independence. Optimum Premiums: Your premiums will commence on a stepped basis and automatically convert to a level premium once the stepped premium is greater than the level premium. Version Page 3 of 6

4 Any Occupation: To be considered totally and permanently disabled means that: 2 You generally have been absent from work for a minimum of 3 6 consecutive months (depending on the insurance provider) and a medical practitioner has determined that you are incapacitated to such an extent as to be unable to engage in any occupation for which you are reasonably suited to based on education, training or experience, or 3 You have suffered loss of independence. Activities of Daily Living: To be considered totally and permanently disabled means that you are unable to perform at least two activities of daily living without the assistance of another person. These activities are: 1 Bathing or showering. 2 Dressing or undressing. 3 Eating and drinking. 4 Using the toilet to maintain personal hygiene. 5 Moving from place to place by walking, wheelchair or with assistance of a walking aid or getting in and out of bed, a chair or wheelchair. Home Duties: To be considered totally and permanently disabled means that: period determined by a medical practitioner that you are incapacitated to such an extent that you are likely to require indefinite ongoing medical care and be unable to ever perform normal domestic duties, leave home unaided and engage in any form of employment. All Duties: To be considered totally and permanently disabled means that: 2 You have generally been absent from work for a minimum of 6 consecutive months (depending on the insurance provider) and a medical practitioner has determined that you are incapacitated to such an extent as to be unable to perform all of the tasks of your occupation or any other occupation. Double TPD: This option up until the cover anniversary (generally age 65), reinstates the life cover sum insured between 0-14 days after it was reduced by the payment of the TPD sum insured in full, without the need for medical underwriting (depending on the insurance provider). Life Cover Buy Back: In the event you are paid a claim under your TPD benefit, the Life cover lump sum is reduced by the amount this claim. This option enables you to repurchase the life cover without medical underwriting within 30 days from the first anniversary of the date of the TPD claim payment. 2 You have been unable to perform normal domestic duties, leave home unaided and engage in any employment for generally 6 consecutive months (depending on the insurance provider) and at the end of this Version Page 4 of 6

5 Trauma cover Double Trauma: This option, up until the cover anniversary (generally age 65), reinstates the Life cover sum insured between 0-14 days after it was reduced by the payment of the Trauma sum insured in full, without the need for medical underwriting (depending on the insurance provider). Trauma Reinstatement: This option enables you to reinstate the Trauma sum insured after it was reduced in full by the payment of a Trauma claim, without the need for medical underwriting. This option can be used within 30 days from the first anniversary of the date on which the Trauma claim was paid. Life Cover Buy Back: In the event you are paid a claim under your Trauma benefit, the Life cover lump sum is reduced by the amount this claim. This option enables you to repurchase the Life cover without medical underwriting within 30 days from the first anniversary of the date of the Trauma claim payment. Income Protection cover Policy Definition at Claim Time: Indemnity Cover: The monthly benefit payable should you make a claim will generally be the lesser of the Insured Monthly Benefit on your policy or 75% of your monthly pre-disability income. Financial evidence of your pre-disability income must be provided to the Insurer before you claim will be paid. Agreed Cover: The monthly benefit payable should you make a claim will be the Insured Monthly Benefit on your policy. This is based on financial evidence of your income being provided to and verified by the Insurer at the time of your application. Specified Injury Benefit: If you suffer from a listed event (this list of events may vary depending on the insurance policy you purchase) as a result of an injury, you will be paid your Insured Monthly Benefit for the specified payment period even if you are working. For example: If you were to suffer a fracture of the thigh (femur), the Insurer will pay you 3 times your Insured Monthly Benefit without you having to serve the waiting period on your Income Protection policy. Day 1 Accident: In the event you are injured and totally disabled for either 3 or 30 consecutive days (this is an option you must nominate on your policy) during the waiting period on your Income Protection policy, the Insurer will pay a proportion of your Insured Monthly Benefit for each day you are disabled. Duty of Disclosure Before you enter into an insurance contract with a Life Insurance Provider, you are required under the Insurance Contracts Act 1984 (Cth) to provide information the Insurer needs in order for the Insurer to decide whether they will accept your application for insurance, what terms will apply to that insurance and how much your premium will be. The person whose life is to be insured under the insurance policy, as well as the policy owner, where those two are not the same person, must comply with the Duty of Disclosure requirements. The Duty of Disclosure applies when applying for an insurance policy and also when varying or replacing an existing insurance policy. It applies from the moment you start completing the insurance application questions until the Insurer advises you that they have accepted your application for Version Page 5 of 6

6 insurance, variation or replacement and issued a Policy Schedule. You must answer all questions asked by the Insurer, honestly, truthfully and correctly. You must tell the Insurer everything you know and everything that a reasonable person in the circumstances could be expected to know would be relevant to the Insurer s decision whether to insure you or not or whether any special conditions or exclusions need to apply to your insurance policy. This includes any current or pre-existing medical conditions. If you do not disclose all relevant matters to the Insurer, it may result in the refusal or reduction of any claim or the cancellation of your insurance policy. Version Page 6 of 6