Schedule · the kinds of life cover
Life insurance, read like a policy schedule
“Life insurance” is four different covers sold under one name. This guide sets each one out the way a schedule does: what it covers, when it pays and how, drawing on ASIC’s Moneysmart, the regulators and the law, with sources linked and dated.
- This guide is
- A plain-language guide
- It is not
- An insurer, a broker or a financial adviser
- Information
- General information, not advice
- Drawn from
- ASIC’s Moneysmart, APRA, the ATO and the Insurance Contracts Act 1984
- Last checked
- 7 October 2026
Part A
Schedule of cover
The four covers, as ASIC’s Moneysmart describes them. A single policy may hold one of them or bundle several.
| Item | Cover | Pays when | How it pays |
|---|---|---|---|
| 1 | Life cover | You die; it may also come with terminal illness cover | A lump sum |
| 2 | Total and permanent disability | Illness or injury leaves you permanently unable to work, under the policy’s definition | A lump sum |
| 3 | Trauma | You suffer a listed critical illness or serious injury, such as cancer or a stroke | A lump sum |
| 4 | Income protection | Illness or injury stops you working | Part of your income, regularly |
Each cover in more detail, with the TPD definitions and the income protection terms: the four kinds of life insurance.
Part B
Schedule of this guide
Six pages, each answering one question about choosing cover.
- 1The four kinds of life insurance
Life cover, TPD, trauma and income protection: what each pays for, and how.
- 2Life insurance inside your super
Default cover in super, when it starts and stops, and how to check yours.
- 3How people estimate how much life cover they need
Moneysmart’s need-less-resources method, and its calculator’s assumptions.
- 4Stepped and level premiums, under their new names
What the two premium types mean, and why they were renamed.
- 5The duty to take reasonable care when you apply
What the Insurance Contracts Act asks of you when you apply.
- 6General advice, personal advice and plain information
What each kind of advice is, and how to check an adviser.
Part C
Endorsement: two premiums renamed
Life insurers have adopted new names for the two ways of paying premiums, developed by the Council of Australian Life Insurers.
Stepped premium- now variable age-stepped premium
Level premium- now variable premium
APRA and ASIC wrote in June 2025 that the word “level” had created a false perception of premium stability. Either kind can change: stepped and level premiums, under their new names.
Part D
Before anything is signed
Moneysmart says an insurer is legally required to give you a product disclosure statement before you buy life insurance, and suggests checking it for these:
- What’s covered, and what’s excluded
- What information you’ll need to give the insurer
- Premiums, and how they change over time
- Waiting periods before you can claim
- How to make a claim
- How to complain about the claims process or a decision
Cover you may already hold. Most super funds automatically give life and TPD cover to members aged 25 or over with a balance of $6,000 or more, so Moneysmart suggests checking your fund to avoid paying twice. Life insurance inside your super.
The questions on the form. For cover taken out wholly or mainly for personal, domestic or household purposes, the law asks applicants to take reasonable care not to make a misrepresentation to the insurer; for other cover, such as cover taken out for a business, a wider duty to disclose usually applies. The duty to take reasonable care.
Advice about your own situation. Financial advisers who give personal advice on life insurance must appear on the financial advisers register. General and personal advice.