What's the difference between stand-alone life insurance policies vs linked policies
If you've done a bit of research into the options available for life insurance, you would have seen that TPD and trauma policies are available as linked or stand-alone policies. When you get a quote, you will find that one option is more expensive than the other, but why is this?
If you claim on stand-alone TPD or trauma, the other insurances are not affected by the payout. On the other hand, if you claim on a linked policy, the other insurances will reduce.
For example, if you had $500,000 of life insurance and $300,000 of linked TPD and you made a TPD claim, the life insurance would reduce to $200,000. If the TPD were a standalone policy, the amount of life insurance would remain at $500,000.
If you select a linked policy the premiums are lower. Stand-alone premiums are higher because you have the ability to claim and not have your other insurances affected.