Life Insurance Companies

There are a number of life insurance companies in Australia. According to the Australian Prudential Regulation Authority (APRA), there are around 32 registered life insurance companies in the country, as of May 2008. To get good policies, good coverage and perhaps even lower costs, you should choose one of these registered life insurance companies who can offer you the right life insurance policy. Before you decide upon which company you are going to be affiliated with, you should first understand what the relation of life insurance companies is to you. This article will serve as a guide to life insurance companies and how they work.

Life insurance companies: what do they do

Basically, life insurance companies offer numerous types of life insurance policies for people to choose from. Once finalised, the policy becomes an agreement between the policy holder and the life insurance company. Life insurance companies are paid a certain amount by the policy holder. In return, the policy holder is assured that the holder, their beneficiaries and their dependents will be paid a certain amount in case the holder dies, is critically injured or suffers from debilitating illnesses. In essence, life insurance companies help families maintain their way of life and help them deal with expenses in case the insurance holder is no longer able to bring in income because of death, illness or injury. In effect, life insurance companies help people deal with the financial burdens of such losses.

Life insurance companies: services and policy types offered

There are four policy types offered by life insurance companies. First is term life insurance, in which life insurance companies agree to pay a lump sum to beneficiaries in case the holder dies within a specified time period. Second is total and permanent disability insurance. Here, life insurance companies will pay for rehabilitation costs, income losses and debts if the holder is totally and permanently disabled, hence unable to work. Third is income protection or disability insurance, in which life insurance companies agree to pay a certain percentage of the holder's gross wage in case they are critically injured or have life-threatening illnesses (heart attack, cancer, etc.). Finally, trauma insurance policies have to do with trauma, critical injury or illness. If the holder is unable to work, or if his or her way of life is changed because of critical injury or illness, life insurance companies agree to pay a lump sum benefit.