All About TPD Insurance
Total and Permanent Disability (TPD) insurance has you covered in the event of permanent disablement. Depending on your policy, it could cover two slightly different situations:
- If you can no longer perform your usual occupation, or
- If you’re unable to work in any occupation
For example, if you’re a typist and you lose a hand, you may be able to work again, but not as a typist. In this instance you would need a policy that covers you against being unable to perform your usual occupation.
If you could never work in any occupation, regular TPD insurance would cover you.
Typically, claims are paid in a lump sum. This means you can use it however you choose. Common things people would pay with their TPD insurance are:
- Paying off a mortgage
- Clearing debts (credit cards, personal loans)
- Rehabilitation costs
- Children’s schooling
- Everyday living expenses
- Alterations around the home to increase mobility
However you spend the payout, you’ve got peace of mind that your family can cope without your income. You don’t need to have full life insurance, and can take out TPD insurance on its own. You can also get it as part of a more complete life insurance policy.
What Does TPD Insurance Cover?
Different insurers will have different rules around their TPD insurance. Like any type of cover, you should carefully read the product disclosure statement.
Firstly, you need to see if you can qualify for TPD insurance. Anybody can submit an application, but like many forms of life insurance, there’s no guarantees you’ll qualify. Pre-existing medical conditions may exclude you from having this cover.
If you’re successful in obtaining TPD insurance, there’s still some specific illnesses or injuries which are covered. There’s also some that aren’t. A few factors will determine how a claim is assessed.
- The extent of your injury/illness
- Your usual occupation (and the impact of your injury)
- Whether you could realistically obtain work in another occupation
You aren’t considered to be permanently disabled if eventual recovery is expected. However, a percentage payout may be justified by some injuries or illnesses if deemed serious enough. For example, a serious back injury requiring 12 months of recovery is not a permanent disablement. It would probably cause serious difficulty in working or ever returning to your exact job. You may be entitled to a portion of the TPD payout. Your insurer will determine your eligibility. For this situation though, you may also want to consider trauma insurance.
Is TPD Insurance the Same as Trauma Insurance?
If you want the short answer, no. They do cover a similar situation though, being injuries or illness that prevent you from working.
When you’re permanently disabled, TPD insurance applies. If you can never work again, this is the type of cover you want.
Trauma insurance is for more temporary disablement. Trauma insurance covers a huge range of conditions, with some common ones being:
- Cancer
- Chronic illness
- Paralysis
- Strokes
- Accidents
- Heart attacks
- Dementia
- Extended hospital stays
- Nervous system diseases
Essentially, trauma insurance helps you and your family continue meeting your financial obligations while you’re unable to work. The difference is, there’s an assumption you’ll be able to return to work at some point. While in contrast, TPD insurance covers you for more permanent conditions.
If I’m Injured at Work, Can I Still Claim?
This is often the case with TPD insurance claims, and your insurer can give you some accurate advice on this. If you’re injured at work, you’re likely to be eligible for workers compensation. Even if you have TPD insurance, you should still apply for workers compensation. When you think about it, workers compensation premiums are a form of TPD insurance paid by your employer. It’s essential you follow all avenues available to you, because there’s never a guarantee your TPD insurance claim will be approved. If workers compensation is one of those – go for it.
You’re still entitled to a TPD payout if you claim workers compensation, but the amount may be affected. Every situation and claim is different, but the payout is affected. We recommend contacting your insurer for further information on how workers compensation would affect your claim.
Doesn’t the National Disability Insurance Scheme Cover Me?
It certainly does. The National Disability Insurance Scheme (NDIS) covers all Australian residents under 65. The NDIS supports you to meet your living costs, and you should definitely apply. Similarly, you should also still consider TPD insurance.
The NDIS is a great program, however depending on your situation, it may not cover everything. Give yourself absolute peace of mind. Consider taking out TPD insurance.
How Do I Compare TPD Insurance?
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