Total and permanent disablement:
If you become permanently disabled, this type of insurance may pay you a lump sum. There is usually a minimum six month period before the payment is made so the disability can be verified that it is permanent. This type of insurance is usually inexpensive.
Example: Geoff and Jane found that they got to the end of each month with just enough money to live. Their two children were at school so Jane was able to work and provide a much needed income. They had sought advice from an insurance broker and agreed they needed a full protection plan. However they only took out a life insurance policy as it was not only the cheapest but it was where they thought their greatest risk was.
Unfortunately Simon became ill, was confined to bed and unable to work. Simon's company kindly paid his wages for a couple of weeks but that was all they could afford and they had to let him go. Six months later Simon wasn't improving and was still confined to bed most of the day. Simon may have been entitled to get a lump sum from a total and permanent disablement policy, had he taken out the policy his advisor had recommended to him.
Trauma Protection:
Sometimes referred to as serious illness cover. It's a lump sum payment, payable if you suffer a trauma or critical illness, like a heart attack, stroke or cancer. This trauma may result in many unforeseen expenses such as the cost of medical treatment, rehabilitation (including career retraining) and home help.
Example: At 57 John had a great life. He had spent 15 years building up his very successful consultancy business. With his two children now grown up and independent, John and his wife were enjoying the freedom to pack up and go sailing whenever they wished.
John suffered a stroke, which immediately confined him to bed and kept him off work - and the boat - for three months. Through his Trauma Protection cover, John was paid a lump sum of $50,500. He also received Income Protection payments of $3,922 and a Bed Confinement payment of $227. With no financial stress, John could concentrate on getting well, and three months later he was back in business.
Medical Insurance:
With the constant rising costs of medical care and hospital waiting lists growing all the time, this insurance enables you to receive private medical care quickly. There are two main types of medical insurance, one is for hospitalisation and specialist care, the other is comprehensive also covering doctor and dentist visits.
Example: Derrick, at 58, was a married father of three with a hectic lifestyle juggling family commitments and work as a store manager. Suddenly he suffered a heart attack, and everything changed. Not only did Derrick have to slow down, but really needed angioplasty - a procedure that would reopen his blocked blood vessels.
He could wait for public treatment, or get it done privately - at a cost of $11,473. With his medical insurance policy he was able to have the procedure done privately almost immediately.
Don't get too focused on the cost of insurance, rather look at its value to you while you build up your wealth and assets. Remember you don't need insurance during your entire life, just when you face the highest risks which is generally when you either have a lot of debt or dependents or both.
The stats are that one in seven die during their working life, and one in five will have a critical illness. So there is a strong chance that you may be affected at some point. Working in the industry I see many examples of people who have insurance and need to call on it and are so grateful they have it. I also see many situations where people's life have been financially devastated because they don't have insurance when they need it.