Most people understand that life insurance is a type of cover that provides for your loved ones in the event of your death, otherwise known as a death benefit. But according to statistics, the majority of claim payouts are, in fact, made whilst someone is alive. This is known as a living benefit.
In some cases Life Insurance will pay out while you are still alive. This is usually under the condition that you have been given 12 or fewer months to live because of a terminal illness.
In 2016, around 60% of TAL’s paid out claims were a living benefit and 40% were paid in the event of death.
Whilst the obvious and most traditionally considered value of life insurance is the death benefit, there are other benefits which pay out while you are alive. These benefits are also referred to as 'living benefits'.
Living benefits generally come from insurances such as Income Protection, Major Illness, Serious Injury or Cancer Insurance. Total & Permanent Disability (TPD) insurance is another example of an insurance that pays out when you are still alive.
Below we look at some of the ways you can utilise a living payment if you are unfortunate enough to be in the position where you need to claim.
The cost of medical treatments can really put you out of pocket and if you’re already battling with a critical illness, the last thing you need is the added financial stress.
Life insurance can help to ease the financial burden of a critical/terminal illness. It could also cover the medical costs, and provide you with the best level of treatment or care that is available.
A Relaxing Recovery
The payout could be used to pay for a relaxing holiday whilst you recover. The last thing you probably want to do after going through an ordeal such as battling a disease or recovering from an accident, injury or illness is go straight back into living your normal life.
You could take some time out to get away from everything, relax and concentrate on feeling better before going back to work or continuing with your day-to-day lifestyle.
The Bucket List
If you have been diagnosed with a terminal illness and given less than twelve months to live, depending on your diagnosis, you could use your life insurance payout to spend quality time with your loved ones, and do the things you’ve always wanted to do by ticking off your bucket list.
Swim with dolphins, go skydiving, take a hot air balloon trip or see the southern (or northern) lights.
Remember Your Family
Although the thought of leaving your family behind is one no one wants to have, life is unexpected and if you were to pass away, they would likely be financially affected. Life insurance can help to set your family up financially and ensure they continue to lead the same quality of life.
A living benefit could be used to pay off yours and their existing debts or help with education fees for your children.
Ultimately, you want to know that your family is being taken care of financially whether you are no longer here or too ill to provide for them. This is why life insurance is a sensible idea which can give you and your loved ones peace of mind.
Products issued by TAL Life Limited ABN 70 050 109 450 AFSL 237848. Involuntary Unemployment Cover issued by St Andrew’s Insurance (Australia) Pty Ltd ABN 89 075 044 656 AFSL 239649.