Nobody likes to think about their own death or the death of a loved one – but it is important to ensure you and your family are financially protected should tragedy strike.

One of the common misconceptions about life insurance products is that they simply pay out a cash lump sum when the policyholder dies – however, there are a variety of other options.

This means you can remain covered across a number of different circumstances where health problems could affect your financial stability. Here are some of the more common policies available.

Income protection

If you ever experience an injury or a long-term illness that could put you out of work for an extended period of time, the financial consequences can be huge.

Income protection insurance will allow you to receive at least part of your salary until you return to the workplace. There are even policies that provide partial payments if you decide to start part-time before fully rejoining the workforce.

You will also be covered for incidents and illnesses that occur outside of your job, meaning you will still receive money for accidents that happen at home or out in public.

Life insurance

A traditional life insurance policy will pay out a lump sum upon death or terminal illness. This will ensure your loved ones are cared for if the worst happens.

It is always important to review your life insurance policy regularly to ensure the payout will cover your financial responsibilities. For example, you may wish to increase the sum insured if you have more children.

Trauma

Rather than paying out on death or terminal illness, trauma insurance can be received if you are diagnosed with a medical condition or other serious health event. Cancer, heart attacks and strokes are commonly covered, but many more are available. The money can be used to pay for medical expenses or ongoing costs such as mortgages and living expenses while you recover.