Experts, as a "rule of thumb", recommend an amount equal to around 10 times your salary.
When deciding how much cover is required it is important to consider every aspect of life. The amount of cover required depends on individual needs and circumstances.
These may include but are not necessarily limited to the following factors:
Whether you are single or married
Whether you have dependants such as children
Financial obligations such as a mortgage; school fees or personal loans
Current and accessible income, assets and any savings that you have
Your lifestyle and how much money would be needed to maintain this lifestyle (i.e. ongoing living expenses).
It is important to think about these and any other relevant factors when choosing your cover, to make sure it suits your needs.
Total and Permanent Disablement
Long term disability can be financially as well as emotionally devastating. Total and Permanent Disablement cover (TPD) may help your family manage the financial consequences of providing ongoing care.
TPD policies can provide a lump sum payment if you are totally and permanently disabled by a serious accident or suffer an illness that leaves you permanently unable to work.
Total and Permanent Disablement Cover can be purchased in a number of ways:
as a stand alone contract, or
as an addition on your Life Cover, or
as part of your Superannuation
If you became permanently disabled would you have sufficient funds to cover your ongoing medical expenses and day to day living expenses?
Trauma Insurance
Trauma insurance pays you a lump sum payment in the event that you are diagnosed with a specified illness (up to 45 major illnesses - depending on insurer) including (but not limited to) things like cancer, heart attack, stroke etc. Trauma insurance is designed to give you money when you need it most.
It is the most expensive product, however it is the one tha's most claimed upon and that's reflective in the cost! An example of this - if you were to suffer from cancer and were to be off work for a couple of years due to chemo, stress etc, your life insurance would not pay out, your TPD insurance would not pay out because you will return to work one day, however your trauma insurance would give you that lump sum payment to ease the financial pressures of not working.
What if you were in a bad accident, or suffered a serious illness, which meant you could no longer earn the income your family depends on?
Your family would not only lose your income, they would need to look after you.
It is important to have income protection plan which can ease the burden because:
It guarantees a monthly income upon total disablement.
It provides a proportion of the guaranteed monthly income upon partial disablement.
It starts paying at the end of the waiting period you select to the end of the benefit period you select or until recovery.
