Most Australians already know main personal insurance types such as life insurance, income protection insurance, trauma insurance & TPD Insurance. However there are less known different types of personal insurance.
Key Person Insurance, also known as Keyman insurance is an important form of business insurance. In general it can be described as an insurance policy taken out by a business to compensate that business for financial loss that would arise from the death or extended incapacity of the member of the business specified on the policy.
The aim is to compensate the business for losses and facilitate business continuity. Key person insurance does not indemnify the actual losses incurred but compensates with a fixed monetary sum as specified on the insurance policy.
For smaller companies with partners, it is designed to protect each partner. If a partner of a firm dies, usually the other partner or partners need to purchase the shares of the business from the deceased's family. Having insurance permits this to be easily facilitated with correct buy - sell agreements in place.
Many business partnerships make it part of the partnership agreement that all partners have income protection insurance. This is put in place so that a partner can purchase the shares from another shareholder who is deceased or disabled.
This is a policy that will provide a lump sum which can be used to pay for funeral expenses. Funeral Insurance is also part of Life Insurance just known by a different name. This type of Insurance is usually offered with little or no medical requirements.
The premiums for funeral insurance are usually more expensive than Term Life Insurance Policies. If you have taken out sufficient Life Insurance then you would not need to have funeral Insurance.
Mortgage Protection Insurance is normally covered by Term Life Insurance or Term Life & TPD insurance which is specially taken out to cover your mortgage repayments. By taking out Income Protection insurance you can also cover your mortgage.
This is a life policy that covers a group of people. This would mainly be the employees of a company or members of an organisation.
This policy provides similar cover to a Term Life Insurance policy. Usually these premiums are lower due to the "bulk purchase". Most of the time these policies have an "Automatic Acceptance Limit" which is the amount of cover that each member would be eligible for without the need for underwriting.
This is similar to Group Life Insurance. This policy provides members of the plan with Income Protection Insurance. The premiums are usually lower than what is available to the general public and "Automatic Acceptance Limits" are usually offered to large groups and the minimum annual premium would be in excess of $50,000.