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What is the difference between lump sums and monthly payments?

Some types of life insurance are designed to pay a one-off amount, while others provide regular monthly payments for an agreed period of time. Here’s a summary.


A lump sum pay-out from life insurance


There are types of life insurance that pay a lump sum if you suffer a serious medical condition, are never able to work again and dying. These are:

  • Trauma cover, which pays out for a range of specified medical conditions and their definition as set out in the policy document. This could help you to focus on getting better at a time when you may not be able to work.

  • Total and permanent disability cover, which pays out if you’re totally & permanently disabled and unable to work ever again. Payment could be helpful to pay for accessibility aids that may be required or assist with certain disabilities.

  • Life cover, which pays out if you die or are diagnosed with a terminal illness and you have less than 12 months to live. A payment can help towards paying off large debt like home loans.

Monthly pay-outs from life insurance


These types of life insurance are designed to provide an ongoing income for a specific period of time whilst you are sick or injured and cannot work. .

Types of life insurances that provide monthly payments include:

  • Income protection cover - if you can’t work for an extended period due to sickness or injury. Payment could help support day to day living costs.

  • Mortgage protection cover - which is like income protection but aimed more specifically to help cover monthly mortgage or rent repayments.

  • Survivor’s income cover - provides income to those you leave behind after dying. This could help provide some financial support to family who you may have supported with your income.

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