In short

Personal insurance covers risks such as death, disability, critical illness and temporary loss of income due to illness or injury.
The main types are life, TPD, trauma (critical illness) and income protection insurance.
Stepped premiums start lower and rise each year, level premiums start higher but stay fixed, and hybrid premiums rise at first then lock in at a set age.
Personal insurance premiums are generally not tax-deductible, though income protection premiums may be.

Personal insurance is a customised form of protection designed to provide security to individuals and their families in the face of various risks. This insurance covers scenarios such as illnesses, disabilities, and even death, offering financial relief and helping manage daily expenses. Various types of personal insurance are available in Australia, each with specific coverage terms and conditions. Understanding these policies is crucial before making a decision.

Types of Personal Insurance

Life Insurance

Life insurance is one of the oldest forms of personal insurance. It provides financial security to the beneficiaries of the policyholder upon their death. The policy pays out a lump sum amount to the beneficiaries, ensuring financial stability. Additionally, many life insurance policies include a savings component, allowing the policyholder to enjoy better financial benefits in the future.

Total and Permanent Disability (TPD) Insurance

TPD insurance provides a lump sum payment if the policyholder becomes permanently disabled due to injury or illness. This financial support can help cover daily expenses and medical costs, offering relief to the policyholder and their family during difficult times.

Critical Illness (Trauma) Insurance

Critical illness insurance pays a lump sum amount if the policyholder is diagnosed with a severe medical condition, such as cancer, heart disease, or stroke. This payout helps cover medical expenses and other financial obligations, allowing the policyholder to focus on recovery.

Income Protection Insurance

Income protection insurance provides financial support if the policyholder is temporarily unable to work due to illness or injury. It ensures that the policyholder can meet their financial obligations without depleting their savings, offering peace of mind during periods of unemployment.

Insurance Premium Styles

When choosing a personal insurance policy, understanding the different premium styles is essential. The premium style determines how the payments are calculated and can significantly impact the cost of the insurance over time.

Stepped Premiums

Stepped premiums are calculated based on the policyholder’s age and increase each year. This option offers lower initial costs but can become more expensive over time.

Level Premiums

Level premiums are based on the policyholder’s age at the policy’s commencement and remain fixed. Although more expensive initially, they can be more cost-effective in the long term.

Hybrid Premiums

Hybrid premiums combine stepped and level premium features. The premiums increase initially and then lock into a fixed rate at a predetermined age. This option provides a balance between short-term affordability and long-term stability.

Frequently Asked Questions

1. What does personal insurance cover?

Personal insurance covers various risks, including death, disability, critical illnesses, and temporary loss of income due to injury or illness.

2. How do I choose the right personal insurance policy?

Consider your financial situation, goals, and the specific risks you want to cover. Conducting a needs analysis can help determine the appropriate types and levels of cover.

3. Are personal insurance premiums tax-deductible in Australia?

Personal insurance premiums are generally not tax-deductible. However, income protection insurance premiums may be deductible. Consult with a tax professional for advice.

4. Can I change my personal insurance policy later?

Yes, you can adjust your policy to better suit your needs. However, changes may affect your premiums and coverage terms.

5. How do I claim a personal insurance benefit?

Notify your insurance provider as soon as an eligible event occurs. Provide the necessary documentation and follow the insurer’s claim process to receive your payout.

For further information on personal insurance and how it can benefit you, contact Absolute Insurance. We are dedicated to helping you find the best insurance solutions tailored to your needs.

Reviewed by Greg Maguire

Greg Maguire reviewed this article to make sure the information is accurate and reflects current insurance practice. It is general advice only and does not take your personal circumstances into account.

Greg Maguire is an Authorised Representative (No. 255354) of AD Advisory Services Pty Ltd, ABN 68 005 830 802, AFSL 237058.

Greg Maguire

Principal

Greg Maguire is the founder and principal of Absolute Insurance, a family-run Perth life insurance broker he runs with his wife Steph. Greg has spent more than 20 years helping Western Australian families and business owners protect what matters most, with life insurance, income protection, TPD and trauma cover from Australia's leading insurers.

Before insurance, Greg was a primary school teacher, and that same patient, one-to-one approach is how he still works today. He takes the time to understand your situation, explains your options in plain English, and stands beside you and your family if you ever need to claim.

Greg holds an Advanced Diploma of Financial Planning from Deakin University and a bachelor's degree from Edith Cowan University. He is an active member of the local community through the Chamber of Commerce and Industry WA and Baldivis Rotary.

Greg Maguire is an Authorised Representative (No. 255354) of AD Advisory Services Pty Ltd, ABN 68 005 830 802, AFSL 237058.

After putting it off for years, my wife and I finally bit the bullet and had Greg assist us in renewing our insurance policy’s. In doing so Greg worked professionally and diligently to find us the best policy. We would both strongly recommend his services.

Nick Ursulic

Greg was amazing to work with and really helped me receive the insurance I wanted for my financial protection when no others were able too. Absolutely fantastic!

Natasha Maitland

Greg has been absolutely amazing with his level of service provided to us for our life insurance and income protection needs. Nothing was too much trouble for him. Great communication skills, knew exactly what we were hoping to achieve and did everything in a very timely manner and made the service to us very personal. He listens and delivers what he promises. Truly grateful for his time and highly recommend his services.

Scott Rountree

Very happy with the service Greg Maguire at Absolute Insurance has provided. He took the time to understand our situation properly and worked hard to find cover that suited our needs and budget. His understanding of FIFO and mining-related roles made a real difference. Clear communication, responsive service and practical advice throughout. Happy to recommend.

Robert Keilar

Super happy with the insurances Greg set up for us and love supporting local businesses

Samantha P

I would absolutely recommend Greg’s services. Before working with him, I had a difficult time obtaining insurance due to complexities in my medical history. Greg guided me through the process from start to finish, acting as a liaison with the underwriters and helping ensure the necessary information and evidence were provided. Nothing ever seemed too complicated or too much trouble for him. I really appreciated his advice, persistence, and willingness to advocate on my behalf with the insurers. Thanks to his support, I was able to secure several policies with some exclusions but no premium loading, which was a much better outcome than I had expected. Thank you, Greg!

Jessica Scholle

Greg has helped us with our insurances for many years. Over that time he has always taken incredible care to ensure that he is suggesting really sensible and considerate options for our needs. Insurance is complicated, but Greg makes it so much easier.

Val Smith

My parents, my partner and I have been with Absolute Insurance for well over 20 years. Greg has been amazing and would highly recommend him to anyone that needs a trusted advisor.

Gregory Allen

We have had Greg’s support and guidance managing our Life Insurance Policies over many years. He has always sought the best options for us and has provided sound advice as our circumstances charged over time. We have always appreciated his flexibility and efficiency. It has been a pleasure doing business with him.

Philip O'Connor

From the start to the finish, Greg was a pleasure to deal with, very professional and most importantly found me and my family the best insurance cover to suit our needs, very happy with the service provided.

Craig

An Insight Into Personal Insurance