Loan Protection Insurance

Loan Protection Insurance is designed to assist you in meeting your Finance contract repayments in the event of specific changes to your personal circumstances.

It can assist you in meeting your repayments in the event of changes to your health, employment status or as a result of your death.

The insurance provided under this PDS is to assist with your vehicle loan repayments in the event of any of the following circumstances occurring:

if you die
if you suffer a Traumatic Event and satisfy the definition of that Traumatic Event as contained in the PDS
if you become involuntarily unemployed, or
if you are unable to work due to accident or sickness

Here are typically 4 categories of cover:

Disablement Insurance

Doug is employed as a full-time administration officer. He has a regular monthly loan repayment of $300. He suffers an injury on the 12th March and is unable to work from 13th March to 27th June inclusive. He has a medical certificate from his doctor for this period. He submits a disablement claim and the claim is accepted. In this example under the Disability Benefit there is no benefit payable for the first 14 days, so Doug would be paid a Disablement Benefit from 27th March to 27th June. For each day of disablement (excluding the first 14 days), Doug will be paid 1/30th of the monthly benefit, and as Doug was disabled for 92 days, the amount paid under the policy would be 92/30ths of $300, which equals $920, and is directly paid to Doug’s finance company.

Involuntary Unemployment Insurance

Julie is made redundant from her job on the 16th September, and is involuntarily unemployed from 17th September to the 12th December inclusive. She has a regular monthly loan repayment of $600 and has involuntary unemployment insurance. She submits an involuntary unemployment claim and it is accepted. In this example again there is no benefit payable for the first 14 days of involuntary unemployment, so Julie is eligible for benefit payments from 1st October to 12th December inclusive. This is a total of 73 days, made up of 31 days in October, 30 days in November and 12 days in December. The total benefit payable is therefore worked out as 73/30ths of $600 which is $1,460, and paid to the finance company.

Death Benefit Insurance

Jack chose to purchase Death Cover under Loan Protection insurance policy when he arranged his $29,000 loan in March. On the 5th of August, John suffered a fatal stroke. As at the date of Jack’s death, the amount outstanding on his loan was $26,000. In this example the total cover is $75,000, therefore a lump sum benefit of $26,000 will be paid to the finance company, to finalise the loan.

Trauma Benefit Insurance

Lyn took out Death and Trauma Cover under Loan Protection Insurance Policy when she arranged her $25,000 loan in August. On the 15th May, Lyn has a heart attack and is admitted to hospital. On this date, the amount outstanding on Lyn’s loan is $21,000. Lyn submits a claim for a Trauma Benefit for assessment. After reviewing the necessary evidence the claim is accepted. In this example the maximum benefit payable is $40,000, and on the date Lyn suffers a heart attack, the amount outstanding on his loan is $21,000. Therefore a lump sum of $21,000, was paid to her finance company to finalise her loan.

So you can clearly see there is a huge benefit in obtaining Loan Protection when you are financing your next car purchase, as you will receive the benefit over the full term of the contract for the once only premium. Depending on the cover selected this could cost as little as $5 a week* and could save you thousands, if something unforeseen happened to you. But remember all insurance policies have exclusions and all companies have different levels of cover, so we recommend that you read the Product Disclosure Statement to select the best policy to suit your needs, and if you have any questions please speak to the advisor arranging the protection.