Part 2 - What is Total & Permanent Disability (TPD) Insurance?
When you suffer from a permanent injury or illness, you become a burden on yourself and your family as you cannot earn an income. However, you will still need money to support you and your family, as well as the most likely additional expenses relating to the injury or illness.
If this occurs, Total and Permanent Disability (TPD) Insurance will provide a lump sum that can provide a financial safety net to support you and your family. It can start by clearing your debts, paying for medical and rehabilitation costs as well as providing funds for the possible required home/car modifications.
In some circumstances, with milder conditions, you may still be able to claim, although you won't be submitting a claim for the entire insured amount. For example, the loss of a finger may not be severe enough to stop you from working. However, such an injury may qualify for a limited benefit (e.g., 25% of a full payout).
How much TPD cover should you have?
The appropriate amount of cover for you will depend on both your family and financial situation. If you have an income protection policy, this will be your primary source of ongoing cash flow, so TPD is primarily to provide for medical needs and debt payment. As a basic guide, a TPD policy may be used to:
What to consider concerning a TPD insurance policy?
So how do can I pay for my TPD Insurance?
You can pay for your premiums from cashflow or your superannuation account if you have an 'any occupation' definition. An 'own occupation' must be paid from your cash flow as you cannot hold this type of policy through your superannuation fund. However, as I have said above, you can get the best of both worlds with a flexible linked policy.
Like with all personal insurances, you can generally choose to pay for TPD insurance with either:
Your choice of stepped or level premiums will impact how much your premiums will cost now and in the future.
When looking into different TPD policies, what else should I look for?
When you are comparing policies or looking to purchase a new policy, you should always read the Product Disclosure Statement as this will highlight the other things you should consider, such as:
What do I do now? I hear you ask.
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Terrell Hyman the Director and Principal Advisor at Trl Financial Solutions.