The essentials: Total and Permanent Disability Insurance

We all like to think that we are invincible sometimes but unfortunately this is not always the case and accidents and traumatic events do occur.  It is human nature to push the negative possibilities aside, however sometimes we are faced with the terrible reality that we can no longer provide an income or manage financially due to a medically diagnosed event resulting in us becoming totally or permanently disabled. 

Why do I need TPD Insurance?

Total and Permanent Disability Insurance protects you in the case that you are unable to work .  It differs from Income Protection Insurance which generally only requires that you are absent from work for an extended period of time rather than permanently due to disability. 

TPD Insurance also pays out an agreed upon lump sum benefit that can be used to assist with day to day expenses in addition to medical bills or rehabilitation. It is important to note that Total and Permanent Disability Insurance does not cover temporary disabilities or traumas, these are better covered under Income Protection or Trauma Cover policies.

There are some important things to know about your TPD Insurance payout:

  • The lump sum paid out can help cover immediate medical expenses and on-going rehabilitation or therapy
  • You can spend the agreed upon benefit however you need to support your family and yourself
  • Use it to cover school fees, mortgage repayments, utility bills, daily expenses, and debts
  • Your partner may be left with limited possibilities of work due to caring for you and this amount can help supplement the household income

How can I figure out how much I need?

There are many varied opinions on the sum for which you should be insured within your Total and Permanent Disability Insurance policy. Some argue that you should cover yourself for as much as you can afford, especially if you believe you are at a high risk of injury or accident in your everyday activities. Another suggestion is that you should make sure it is the equivalent of your death  whilst others recommend that you should consider all of your debts, in addition to potential medical expenses, and projected living costs to determine how much you should be insured for.  

All your future financial needs should be identified, however we recommend that you inform yourself as much as possible prior to deciding on your insured figure and seek professional advice for such an important decision. All of your personal and business financial needs should be recognised so that the financial impact on your life can be assessed in the event of permanent disability. In addition to this it is also wise to obtain advice on other insurance you may have obtained such as Income Protection Insurance, Life Insurance, or Trauma Cover and how these will interact with your TPD Insurance.

Total and Permanent Disability Insurance is important to safeguard yourself and reduce the ongoing financial burdens that may arise from the loss of income. For information regarding TPD Insurance, call us at Tradecover Financial Services and we will be more than happy to help.