Personal insurance provides financial coverage for you and your family in the event of illness, injury, or loss of the ability to earn money. This insurance policy will allow you and your family to maintain a good standard of living as it provides coverage for outstanding debts and other everyday expenses. Personal insurance is divided into many categories. However, we will focus on just four of them. They include life insurance, critical illness insurance, total and permanent disability insurance and income protection insurance. Let take an in-depth study of these categories of personal insurance policies.
4 Categories of Personal Insurance
1. Life Insurance
Life insurance gives the insured the option to choose the particular period of time he/she will receive coverage for. This time period can vary from 5, 10, 20 to 30 years. Life insurance is designed to provide protection in the event death or a terminal illness. It pays a benefit that can be used as your beneficiaries deem necessary. Life insurance proceeds can pay for funeral expenses, and pay for extra expenses that the beneficiaries require. It can also be used to pay off the mortgage and provide a reserve for the spouse of the deceased if they decide to stop working.
2. Income Protection Insurance
Income protection insurance can be of great help during the most difficult times of your life (temporary unemployment due illness or injury). Income protection pays the insured 75% of their monthly wage until he/she is able to work again. Additionally, this policies replacement premiums are tax-deductible, though the payments will be taxed as they are treated as salary.
3. Critical Illness Insurance
Critical illness insurance provides coverage upon diagnosis of a severe medical condition, such as cancer, heart disease, or stroke. Critical illness insurance provides an alternative source of funding for the insured's financial commitments so that he/she can focus on recovery. This policy covers up to 40 different medical conditions. It can cover the insured's medical expenses, purchase of medical equipment to aid your recovery, and rehabilitation costs. Critical illness insurance also provides coverage for hire fees for a nurse, home modifications, extra income to the insured's family to keep up with financial commitments and funds for a recuperation holiday.
4. Total and Permanent Disability Insurance
Total and permanent disability insurance provides coverage that helps cover the expenses incurred when insured is rendered permanently physically challenged, as a result of serious illness or injury. This benefit can be used by insured to pay for the following, medical expenses, and rehabilitation costs. It also covers the fees for hiring a nurse or housekeeper, home modification fees and to cater to the insured's condition, and pay for daily expenses and other financial commitments. Finally, total and permanent disability insurance gives the insured the financial freedom that could have been difficult to achieve after he/she became physically challenged. And it can also ease the stress of the insured's situation by giving him/her peace of mind as having knowledge that there is a financial backup to fall on despite their condition will be a source of joy.
What You Need To Know About Personal Insurance
Income Protection Insurance
Income protection is a financial cover that provides you with a steady stream of monthly income. It serves as a great assistance during any one your life’s most stressful times such as temporary unemployment. It can also be used to pay rent, mortgage, and daily expenses such as food and bills. It pays you 75 percent of your gross monthly income. However, it still remains one of the most overlooked types of insurance policy.
Upon diagnosis of a traumatic medical condition such as cancer, heart disease or stroke, critical illness insurance can be used as a cover to cater for you. Also known as Trauma Insurance, critical illness insurance can cover up to 40 different types of medical events. As a type of living insurance, you do not have to die before you can benefit from it.
Total and Permanent Disability Insurance
The financial freedom that would have been very difficult to achieve at a disabled state is provided by Total and Permanent Disability insurance through a lump sum payment that will cater for all the costs and expenses you incurred if you become permanently disabled, as a result of injury or serious illness.
As one of the oldest existing types of insurance, life insurance was designed primarily to offer coverage for terminal illnesses with life duration of only 12 months or in an event of death. Life insurance pays a chunk sum benefit to your family or financial dependant that can be used to pay for funeral expenses, mortgages, extra expenses for family needs and other financial obligations.
All available insurance plans in the market have been summed up together to establish these four types of insurance. Although they may seem to have similar benefits and features, they have been designed for the singular purpose of providing you with protection and total peace of mind. So depending on your needs and the risks you might be exposed to, you can separately purchase any one of these personal insurances.