Have you ever considered what would happen if you become permanently disabled due to an accident or illness and could no longer perform your current job?
If you purchase total and permanent disability insurance, you may be able to get some financial support for yourself and your family if something like this happens to you.
What is total and permanent disability (TPD) insurance?
Total and permanent disability insurance, or TPD insurance, provides a lump sum payment in the event that you become totally and permanently unable to work due to an illness or injury.
TPD insurance coverage will typically cover you if you are unable to work ever again, either in your “own occupation” or “any occupation,” depending on your coverage policy and insurance provider.
This money could be used to cover daily living expenses, such as rent or a mortgage, as well as to pay off any personal debts like a car loan or home mortgage.
How much does the TPD insurance cost?
Several variables, including your age, gender, occupation, medical history, way of life, and the level of coverage you choose, can affect the price of TPD insurance.
Typically, insurance companies will offer either “stepped” or “level” premiums.
Each year, stepped premiums are revised and typically rise as you age. Level premiums will typically start out more expensive but won’t go up as you get older.
What does the TPD insurance cover?
If you are unable to return to your regular line of work, you are typically covered under the TPD policy’s “own occupation” definition. This kind of insurance is typically more expensive and can only be purchased outside of superannuation.
The “any occupation” definition requires that you be unable to return to work in any position that is compatible with your education, training, and experience. Although this coverage is frequently less expensive, it might be more challenging to satisfy the conditions for a successful claim.
Do I need TPD cover?
Typically, this is determined by your individual needs. TPD coverage may provide you with a lump sum payment if you become totally and permanently disabled as a result of an injury or illness. This could help pay for medical expenses, home modifications, and other costs associated with your disability. Given the cost of such expenses, it’s worth considering TPD insurance at some point in your life.
How to buy TPD Insurance
Check to see if you already have TPD insurance through your super. Most super funds provide default TPD cover, which is less expensive than purchasing it separately. If necessary, you can increase your level of protection through your super fund.
TPD insurance can also be purchased from a
- financial adviser
- an insurance broker
- or an insurance company.
TPD insurance can be purchased separately or in combination with life insurance. If it’s packaged, any amount paid out on a TPD claim may be deducted from your life insurance. Check the PDS or contact your insurer.
What should you consider before purchasing TPD insurance?
If you’re thinking about getting a TPD policy, make sure to look into the following:
- whether the policy covers “your own occupation” or “any occupation.”
- what exclusions may apply
- what waiting periods apply
- what are your coverage limits are
- Premiums: both now and also in the future.
Before purchasing any financial product, including TPD insurance, read through any relevant documentation. Consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD), which the product issuer should provide.
You might want to seek professional financial advice to assist you in making your decision.
How can you make a TPD Insurance Claim?
To learn more about the procedure for filing a TPD insurance claim, talk to your insurance provider, super fund, financial advisor, or broker (from whomever you purchased a TPD insurance policy).
Your provider will typically ask you for information to support the claim, and you’ll generally need to fill out a claim form.
Be prepared to present documentation proving your inability or incapacity to work. For insurance purposes, this is typically necessary with this kind of claim. You might, for instance, be required to submit expert reports.
Total Permanent Disability (TPD) insurance covers you in the event that you are rendered totally and permanently unable to work as a result of an injury or illness and are unable to perform any work in any occupation, regardless of your prior education, experience, skills, or training.
Before you can submit a legitimate TPD claim, you typically have to be away from work for a continuous 3 to 6 months.
Your wait time for the lump sum payment will typically be determined by how quickly you submit your completed claim forms and supporting documentation to the insurer and how quickly the insurer evaluates your claim.