Insurance Buy Back

When establishing life insurance, TPD insurance and trauma insurance you will need to decide whether to take out cover as linked policies, or as stand alone policies. As a stand alone policy if you claim on one insurance the other insurances are not affected, however when linked cover is established you need to take into consideration the following:

• With linked cover the claim on one insurance will usually reduce the other insurnace cover that carries forward. For example suppose you have $500,000 life insurance and $300,000 TPD insurance, and you make a claim on the TPD Insurance. After the claim your life insurance will be reduced to $200,000 to relfect the claim that has been made. This is if the cover is linked.
• Stand alone cover might provide the ability to claim on different covers without affecting others, however the premiums with stand alone cover will be higher.

TPD Buy Back

In the above example you may be able to buy-back the TPD insurance at a later date. Meaning that after 12 months you can reinstate the life insurance back up to the original $500,000 of cover, in essence buying back your cover to the original amount. A buy back for TPD insurance can be offered as standard by some companies, and other will offer it as an addition that will increase the premium.

Trauma Buy Back

A trauma buy back works in the same way as a TPD buy back, after a claim you can reinstate your life insurance back to the original cover amount. Generally this is 12 months after the original claim, however with trauma you can also take out a trauma reinstatement.

Trauma Reinstatement

A further option with trauma insurance can be trauma reinstatement. This allows your trauma insurance to be reinstated in the event of a claim, meaning that you may be able to make multiple claims against the single trauma policy. This is usually offered as an extra and will attact an additional premium.