Bundling life insurance with TPD & trauma cover
The need for life insurance is obvious, and having a policy in place can give you peace of mind.
If you pass away, your loved ones would be well looked after, but if you don't die and still need hospital care, what happens then?
You certainly wouldn't be able to make a life insurance claim because you would still be alive. You may believe that your health insurer can foot the hospital bills, but what if you take a long time to recover? Or you couldn't go back to work at all due to being permanently disabled?
This is why TPD insurance and trauma insurance were created, to fill the gap that life insurance leaves. This then can lead to the question of whether to bundle insurance or not.
The difference between TPD and trauma insurance
The main difference between TPD insurance and trauma insurance is that trauma insurance pays you if you suffer a critical illness or traumatic event as defined by the policy, while TPD insurance only pays if you become totally and permanently disabled.
Should you bundle your life insurance policy?
Once you have established that you need TPD and/or trauma insurance, asking yourself whether you should have bundled insurance really depends on your needs and your situation.
If you have a combined life insurance and TPD insurance amount of $500,000 and you make a TPD claim of $500,000, you cannot make an additional life insurance claim later on as the previous TPD claim would have used up all the funds.
In this instance you may like to explore buy back options or purchasing a stand alone TPD insurance policy.
Most stand alone trauma policies usually state that you must survive a traumatic event for 14 days before you can make a claim our as outlined in your policy (some life insurance companies have this period for as long as 21 or 30 days).
If you die before this period it is obvious that you cannot make a claim. However if your life insurance was bundled with trauma insurance, you would still be able to make a claim on your policy depending on their definition.
Save on bundled insurance
The cost of purchasing trauma or TPD insurance is substantially more affordable by bundling them with a life insurance policy as opposed to a stand alone policy. It is therefore worthwhile discussing your bundled life insurance options with an xLife adviser to see what would suit your personal situation.
An xLife adviser can also compare bundled life insurance policies versus stand alone policies from different insurers.
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March 2010
