Combined Life Insurance Policies

Combined policies are a great way to take out multiple cover types at a more affordable price. Also known as linked/bundled policies or rider benefits, they allow you to combined several types of cover into the one policy, at a more affordable price.

These policies may make it easier to decide which cover to take out and which to leave out.

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Which types of cover can be combined?

Life Insurance
Trauma Insurance
TPD Insurance

Life and TPD Insurance

You could choose to take out life insurance and TPD insurance, providing financial protection upon your death or diagnosis of a terminal illness and for total and permanent disability.

TPD Insurance and Critical Illness Insurance

If you already hold life cover and want to add TPD and Critical Illness insurance, you may decide to leave your life insurance cover as a stand alone policy and combine just your Trauma Cover and Critical Illness Cover.

Life and Trauma and TPD Insurance

This policy provides protection against death and terminal illness, critical illness and total and permanent disability.

Income Protection

While you cannot combine income protection in the same way as other type of cover, most insurers will offer a multi-policy discount of  5-10% when you take out multiple cover types.

How do linked/combined policies work?

Combined policies work in a similar way to stand alone policies in that nothing changes in what the policy covers you for. However there are some differences:

  • When a claim is paid out in one cover type, the insured amount for the other types of cover included in the policy is reduced by the amount of the claim.
  • You will only pay one premium, rather than separate premiums.

Please see the examples below of how both stand alone and combined policies work:

Stand Alone Cover

Life InsuranceTrauma Insurance
Amount of Cover$1,000,000$400,000
Trauma paid out($400,000)
Cover Remaining post trauma claim$1,000,000$0

Combined Policy

Life InsuranceTrauma Insurance
Amount of Cover$1,000,000$400,000
Trauma paid out($400,000)($400,000)
Cover Remaining post trauma claim$600,000$0

Whereas in stand alone cover, the life insurance amount remained unaffected, in the combined policy, it reduces by the amount of the trauma payment.*Please note that these are examples only

More Information about combined policy

Why is a combined policy cheaper than a stand alone policy?

Combined policies are generally cheaper as the overall liability to the insurer is reduced.

In the Stand Alone example above, the overall liability to the insurer is $1.4 million.

In the Combined Policy example, the overall liability to the insurer is $1 million, meaning the premiums are generally cheaper than stand alone cover.

Who is a combined policy suitable for?

You may want to take out a combined policy if:

  • You want comprehensive cover
  • You want to make your policy more affordable.

What policy options are available as part of a combined policy?

A number of additional options are available for combined policy holders:

  1. Life Cover Buy Back: This allows you to re-purchase the portion of life insurance that is reduced when a full trauma claim is made, 12 months after the initial claim.
  2. Double Trauma/TPD: Generally Double Trauma/TPD automatically reinstates the portion of life insurance that is reduced when a full trauma or TPD claim is made. Premiums are also waived on the reinstated portion of the cover.

Please note that not all life insurance companies will offer these options and select insurers.

Published: February 2, 2016

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