Life Insurance Basics

‘Life insurance’ is often used as an umbrella term to refer to several different types of cover that provide financial protection in the event of death, diagnosis of a serious medical condition listed in the cover, or if you suffer sickness or injury and can’t work. 

Budget Direct Life Insurance cover types include Life, Total Permanent Disablement (TPD), Trauma and Income Protection (known in the PDS as Disability Income Insurance cover). You can choose one more of these covers with the aim of financially protecting yourself, your family and loved ones if life takes a turn for the worse.

Depending on the cover type(s) you choose, and if you meet the conditions of cover, you would generally be eligible to claim if you were;

• to die or were diagnosed with a terminal illness (Life cover) 
• unable to ever work again due to a sickness or injury (TPD cover), 
• unable to work due to sickness or injury (Income Protection cover) or 
• diagnosed with a serious medical condition listed in the PDS (Trauma cover).

If you are aged between 16 and 69 you can apply for up to $15 m of Life cover. Your cover can remain in place to age 99 as long as you continue to pay your premiums when due. Please check FAQ’s specific to other cover types available with Budget Direct Life Insurance for details on minimum and maximum entry ages, and cover expiry ages.

As long as premiums are paid, your policy will renew each year up until the expiry age that applies for the cover type(s) that you hold.

Budget Direct Life Insurance policies are issued by NobleOak Life Limited, an Australian life insurer who is regulated by the Australian Prudential Regulation Authority (APRA); and it holds an Australian Financial Services License issued by the Australian Securities and Investments Commission (ASIC).

Budget Direct Life Insurance is issued by NobleOak Life. With a variety of awards and over 145 years of experience insuring Australians, we work together with NobleOak to ensure you receive great value, comprehensive life insurance for you and your family.

It really depends on your personal circumstances.

If you were to pass away, Life cover could help clear any debts you might hold, assist with funeral expenses, provide an ongoing income stream for your spouse and dependents, or provide a financial legacy for your loved ones.

TPD cover provides a lump sum benefit If you are sick or injured and can never work again as a result. It may help you reduce or clear any debts, meet the costs of home modifications or pay for ongoing treatment costs.

Income Protection cover pays a monthly benefit after your selected waiting period and for the duration of your selected benefit period if you cannot work due to sickness or injury. It may help you meet ongoing financial commitments whilst you recover.

Trauma cover provides a lump sum benefit if you are diagnosed with a serious medical condition listed in the PDS. It may be used to help relieve the financial burden as you adjust your lifestyle, pay for any excess treatment expenses, or it may provide you and your family with an ongoing income stream whilst you focus on getting back on your feet.

Your superannuation may include life insurance cover. For some individuals, the amount of life insurance held within super may be nominal. It may be a good idea to check with your fund to see how much cover you may hold, or if you have cover at all.

Depending on your circumstance, your personal financial situation and life-stage, you may require more insurance than what is available in your super, or different cover types that may not be available.

You may wish to consider the additional cover types and flexibility that are available with a product that is attained outside a super fund, such as Budget Direct Life Insurance.

People often purchase multiple life insurance policies for various reasons, such as to increase their overall coverage, diversify their investments, or meet different financial needs.

Here are a few reasons why someone might consider having multiple life insurance policies:

Income Replacement: If you have dependents and need to provide for their financial security in the event of your death, you might purchase one policy to cover immediate expenses and another to cover long-term needs, such as mortgage payments and school or university fees.

Diversification: Some people choose to diversify their insurance coverage to spread risk and manage costs. This can involve having policies from different insurers.

Topping up life insurance within superannuation: Some people may decide to top up their life insurance in their superannuation if they feel it falls short of their needs. The Rice Warner ‘Underinsurance in Australia 2020’ report indicated there is a gap between how much cover many Australians have through super, and how much they may need. The report reveals, “the median default cover of superannuation funds meets approximately 65% to 70% of basic level death cover needs for average households, but a much lower proportion for families with children.”

If you are thinking about purchasing or holding multiple policies: Keep in mind that when you apply for multiple policies, insurers may require you to provide information about your existing coverage, and they will assess your eligibility based on your medical and financial situation. Additionally, premiums will be based on factors such as your age, health, and the type and amount of coverage you are seeking.

References:

https://www.ricewarner.com/new-research-shows-a-larger-underinsurance-gap

If you’re looking to re-evaluate your current life insurance, it might be worth using Budget Direct’s Life Insurance calculator, to get an estimate of what level of life insurance you should consider having. You can get a quote online, or call the Budget Direct Life Insurance team at NobleOak on 1300 222 670.

With the indexation feature, your sum insured amount on Life, Total and Permanent Disablement (TPD) and Trauma cover will increase at each policy anniversary to help guard against inflation. The increase is based on the previous year’s Consumer Price Index, or 3% (whichever is the greater). Your premium will automatically adjust to reflect the increase in cover.

You do have the option to stop the indexation of your cover if you prefer, in which case your cover amount will remain fixed and any rise in your premium will only be due to your annual age increase.

A pre-existing medical condition is one which you have either been diagnosed with, or present symptoms of, prior to taking out your life insurance policy.

Your application for Budget Direct Life Insurance will be assessed upfront, where you will be asked a series of health and lifestyle questions. You can still make an application for cover if you have a pre-existing medical condition; all applicants must ensure they meet their ‘Duty to Take Reasonable Care’ when answering the questions asked during the application process. An explanation of 'the duty' is detailed in the PDS and in the application form.

As part of the underwriting process, your application for life insurance may result in the requirement for a blood test, or a medical examination and request for your medical records. If this is the case, the Budget Direct Life Insurance team at NobleOak will arrange this and do so at no cost to you.

If there are any special acceptance terms that are required to be noted on your policy – for example, with respect to a pre-existing condition – you will be advised prior to the enforcement of your policy.

Life insurance is an important consideration with many Australians. In particular, individuals tend to consider life insurance at various life stages, such as when buying a home, getting married or starting/adding to a family. 

The Budget Direct Life Insurance claim team at NobleOak can be contacted on 1300 220 627.

To apply for life insurance, you may need copies of your recent medical records and any prescription medicines you are taking.

There is no waiting period for life insurance, however, there is a standard exclusion that applies to death by suicide for the first 13 months after commencing, reinstating, or increasing your cover (but only to the extent of the increase).

If you hold Income Protection Insurance, a waiting period of either 30 or 90 days (depending on the option selected at the time of your application) will apply before an approved claim will be paid.

If you hold standalone Trauma Insurance, a survival period of at least 14 days (after a trauma event takes place) without the aid of an artificial life support system applies. 

In the event of a claim, if you hold Life cover the proceeds will be paid to your estate if you do not have a will or a nominated beneficiary. This will depend on your state's or territory's intestacy laws.

Some individuals who apply for Budget Direct Life Insurance may not require a medical examination. Whether or not you need a medical examination depends on a number of factors, such as your age, health status and lifestyle, and the cover types and sum insured amounts you apply for.

No, Budget Direct does not offer joint life insurance policies. Each individual will be required to apply for Budget Direct Life Insurance separately.

Yes, there are age limits for the various cover types available. Depending on the type of life insurance you choose, you must meet the following minimum and maximum age criteria:

If you first suffer a serious listed medical condition while you are covered for Trauma Insurance, in the event of a claim you will receive the sum insured amount as a lump sum. The proceeds may help you pay for treatment expenses and help replace any lost income whilst you recover.  

The main trauma events that Budget Direct Trauma Insurance covers are:

• Cancers - excluding specified early-stage cancers
• Coronary Artery Angioplasty – through specific procedures
• Coronary Artery By-Pass through open chest surgery
• Heart Attack with evidence of severe heart muscle damage
• Stroke in the brain resulting in specified permanent impairment
• Three Vessel Coronary Artery Disease - requiring specific treatment

For the full list of 37 trauma events covered and full medical definitions please refer to the Product Disclosure Statement (PDS).

If you are aged between 18 and 59 you can apply for up to $2m Trauma Insurance cover. Cover can remain in place to age 70 as long as you continue to pay your premiums when due.

Trauma Insurance, sometimes known as critical illness or recovery insurance, covers you in the event you are diagnosed with a serious listed medical condition that is referenced in the Product Disclosure Statement (PDS). If a claim is approved, the sum insured amount you have in place is paid to you as a lump sum. It may help you pay for treatment expenses, and help replace any lost income whilst you recover.

You can start by taking out Life Cover with Budget Direct. During the application process, you’ll have the option of adding Trauma Insurance to your policy. This means that in the event of a Trauma Insurance claim, the sum insured will be advanced from the Life Cover amount you have selected.

Alternately, you can take out standalone Trauma Insurance without it being included as an option within Life Cover. If you wish to take standalone Trauma Insurance, please call 1300  220 627.

The main trauma events are:

• Cancers - excluding specified early-stage cancers
• Coronary Artery Angioplasty – through specific procedures
• Coronary Artery By-Pass through open chest surgery
• Heart Attack with evidence of severe heart muscle damage
• Stroke in the brain resulting in specified permanent impairment
• Three Vessel Coronary Artery Disease - requiring specific treatment

For the full list of 37 trauma events covered and full medical definitions please refer to the Product Disclosure Statement (PDS).

Trauma Insurance can be taken as an option within Life cover, or as standalone cover. Your cover amount will be paid as a lump sum if you suffer from one of the listed trauma events in our Product Disclosure Statement.

The main trauma events are:

• Cancers - excluding specified early-stage cancers
• Coronary Artery Angioplasty - through specific procedures
• Coronary Artery By-Pass - through open chest surgery
• Heart Attack - with evidence of severe heart muscle damage
• Stroke - in the brain resulting in specified permanent impairment
• Three Vessel Coronary Artery Disease - requiring specific treatment

For the full list of 37 trauma events covered and full medical definitions please refer to the Product Disclosure Statement (PDS).

In the event of an approved claim, you can spend the proceeds any way you wish to help with your recovery and getting back on your feet,

Health Insurance covers healthcare, medical, and surgical expenses incurred in exchange for a premium. In Australia, private health insurance allows you to be treated in a hospital as a private patient and pays for some healthcare costs that Medicare doesn’t cover. The amount of coverage you receive depends on your policy.

*Budget Direct has not facilitated the delivery of private health insurance through GMHBA Limited (GMHBA) since 25 May 2018.

Budget Direct’s Income Protection Insurance (also known as Disability Income Insurance) will cover you for up to 70% of your regular, pre-tax income to a maximum of $30,000 per month (after your waiting period, and subject to certain limits) if you cannot work due to Sickness or Injury. Within these guidelines, you can choose a monthly benefit amount to suit your needs and budget.  

If you wish to apply, you will need to choose your ‘waiting period’, which can be either 30 days or 90 days. This is the period of time you will have to wait before you become eligible to receive a monthly benefit. If you choose a 90-day waiting period, your premiums will be lower, because you are effectively self-insuring for those first 90 days of disability. 

You’ll then be required to choose the ‘benefit period’, which is the maximum length of time you will receive a monthly payment while unable to work due to sickness or injury. With Budget Direct Income Protection Insurance, you have the choice of a 2-year or 5-year benefit period. Premiums for the 2-year benefit period are generally lower than the 5-year benefit period.

You can apply for Income Protection Insurance If you are aged between 18 and 55 and working at least 20 hours per week. Cover can remain in place to age 65 as long as you continue to pay your premiums when due.

You will be eligible to claim if, after your waiting period, any sickness or injury results in you being unable to work and earn an income. The sickness or injury must be certified by your medical practitioner and confirmed by one or more medical specialists nominated by the Insurer.