If you choose a stand-alone policy, when you claim on one type of insurance, the other insurances are not affected. The benefit of stand-alone cover is its ability to claim on covers without affecting the rest of your cover. However, this makes stand-alone premiums higher.
With linked cover, a claim on one insurance will usually reduce the rest of your insurance cover that carries forward. For example: suppose you have $500,000 in life insurance cover and $300,000 in TPD insurance, and you make a claim on the TPD Insurance. After the claim, your life insurance will be reduced to $200,000 to reflect the claim that has been made.
TPD Buy Back
In the above example you may be able to buy back the TPD insurance at a later date. This means 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 is included 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.
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 attract an additional premium.