Total & Permanent Disability Insurance (TPD) is designed to help a person at a time when it matters the most. When you are unlikely to be able to engage in paid work from now and into the future. It offers a lump sum that provides benefits to the life insured after a certain period of disability and after medical practitioners have verified the definition of disability has been satisfied.
How Are Policies Different?
There are many ways policies differ from each other. Some of the simplest ways are the length of time it takes to qualify for disability. More complex, are the numerous different methods used to establish whether a person qualifies for Total and Permanent Disablement or not. Then there are different ways you can implement a policy, such as taking out a stand-alone policy or having it implemented as an add-on to a life insurance policy.
How Much Cover Do You Need?
The fact is, there are many different degrees of disability. A person who loses the use of a limb that is essential to work may have a very good standard of living, and if covered under an ‘Own Occupation’ policy may actually end up working in another capacity. Compared to somebody who ends up in a coma and needs round the clock support, his financial needs are relatively small.
Speaking with a financial adviser will help you clarify exactly what is important to you in the event of a serious illness.
Definition of Total & Permanent Disability
If you choose an ‘Any Occupation’ policy, you will normally only qualify for a benefit under your policy if you are assessed as being unable or unlikely to ever be able to work again, taking into account not only the occupation you work in right now, but also any occupation that you are reasonably suited to by way of education, experience or training.
If you are fortunate to have an ‘Own Occupation’ policy, you will be eligible for your benefits if you are assessed as being unable or unlikely to be able to work in your own occupation only. Under this scenario, you may end up being able to work in a lesser skilled role and still receive a benefit!
TPD Insurance can be a very flexible product, and many insurers offer the ability to pay premiums either directly to the life insurance company or by implementing via a superannuation product. There are also options to have a policy that is cheap to start with and which increases with age, or one that stays almost the same cost throughout the term of the policy.
What Influences The Cost of a Policy?
As the definition of TPD relies on the occupation of the life insured, it goes without saying that the riskier your occupation and more physically demanding your role is, the higher the premiums are likely to be. Good health always helps when implementing a policy, as does being a non-smoker.