Common life insurance myths

There are many myths about life insurance, so here are some points that you might like to consider.

Myth One: Your life insurance only comes into effect if you pass away

Life insurance products are designed to help you and your family during what can be a difficult time. Different life insurance products are designed to protect you from different events that can occur:

Life cover – pays a lump sum payment in the event of death or diagnosis of a terminal illness that can help repay debt and cover living costs.
Total and Permanent Disability (TPD) insurance– pays a lump sum in the event of total and permanent disablement resulting in being unable to work again. TPD insurance can provide a financial safety net to help you and your family, and pay for medical and rehabilitation costs.
Trauma (or critical illness) insurance- pays a lump sum for major illnesses (for example, cancer, heart attack or stroke) and can help support you and your family if you can no longer work.
Income protection – pays some of your income if you're unable to work due to sickness or injury.

Myth Two: If you're healthy, you don't need life insurance

It's easy to think you don't need life insurance if you're fit and healthy. But if you are planning, or have recently experienced a big life change, such as buying a house, getting married or having a baby, you should consider what might happen if the unexpected were to occur and how you would maintain your family's lifestyle. It is also worthwhile to keep in mind that if you do experience health issues in the future this may make you ineligible for life insurance cover or attract higher premiums.

Myth Three: If you have private health cover, you don't need life insurance

Private health cover can be a big help if you need to go to hospital or encounter certain health care costs, but it doesn't provide cover for costs such as any rehabilitation you may require, or your mortgage repayments. TPD or income protection could assist in covering these additional expenses, and help preserve your family's financial situation, in the event of an accident or if you suffer a serious illness and are no longer able to work.

Myth Four: The built-in life insurance in your superannuation policy is all you need

Many super funds offer some life insurance for their members. It is important to find out what type of cover you have in your super fund and whether it will be enough to cover all your expenses. If you find you do not have enough cover, you could consider standalone life, income protection, TPD or trauma insurance to cover the gap.

Read about how income protection can benefit your financial future should the unexpected happen.

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Things you should know

Priority Protection provided by AIA Australia (Life Cover, Total and Permanent Disablement, Crisis Recovery and Income Protection), as described on this website, are provided and issued by AIA Australia Limited ABN 79 004 837 861, AFSL 230043 (AIA Australia) and distributed by the Commonwealth Bank of Australia ABN 48 123 123 124, AFSL 234945 (CBA). AIA Australia is not part of the CBA Group. CBA and its related entities do not sell, issue or guarantee the obligations or performance of AIA Australia or the products it offers, and these insurance products do not represent a deposit with or liability of either CBA or any of its related bodies corporate.

The information on this page is intended to provide general information. It is current at the date of publication and may change. It has been prepared without taking into account your objectives, financial situation or needs and is not intended in any way to be financial, legal, tax, health, medical, nutritional or other advice. You should, before acting on this information, consider the appropriateness to your circumstances and needs and read the relevant product documents (Product Disclosure Statements (PDS), fact sheets, fund rules and terms and conditions) before deciding to acquire or continue to hold any of these products. For Priority Protection provided by AIA Australia (Life Cover, Total and Permanent Disablement, Crisis Recovery and Income Protection), you should refer to the relevant Product Disclosure Statements (PDS) before making a decision on the product. If necessary, you should consider obtaining advice from a financial, tax, medical or health professional.

AIA Australia has prepared Target Market Determinations (TMDs) which describe the class of consumers that comprise the target market for each cover type available for this product. The Target Market Determinations can be sourced at www.aia.com.au/tmds.

AIA Australia has adopted the Life Insurance Code of Practice, which contains minimum standards of service that customers can expect from insurers. The code can be found at aia.com.au/en/about-aia/about-us/industry-standards.

For any questions about these products, call AIA Australia on 1800 491 588, Mon–Fri, 9am–5pm (Syd/Melb time). Neither CBA nor any of its related bodies corporate are authorised representatives of AIA Australia. For more information on the financial services CBA provides, you should read CBA’s Financial Services Guide and Privacy Policy. If you purchase a Priority Protection policy, CBA is paid a commission by AIA Australia which is a percentage of your premium.