In this article, we take a look at TPD Insurance.  This stands for insurance that covers total and permanent disabilities. Here’s why it’s good to be aware of it. 

Take a look around you and you’ll come to realize that most people are able-bodied individuals.  If you’re one of them, you’re blessed with the ability to perform everyday tasks like walking, driving to work, using cutlery when eating, and reasoning with logic. You can even push your mind and body to the limit. This is especially true when training for a sport or memorising Pi’s decimal places. You probably even have goals and dreams that hinge on your body’s physical and mental prowess. 

These capabilities may seem quite unremarkable and ordinary. However, all it takes is one acute health diagnosis or accident to completely derail the course of your life. Potentially leading you to a world of financial ruin and disability.

While the risk of such events is realistically low, it’s not non-zero. And if you or a loved one are faced with such risks, the consequences can be life-altering.

Besides the severe drop in your quality of life, you’re also expected to pay a lot for medical care and assistance. However, one solution can help you weather this financial ruin: total and permanent disability (TPD) insurance.   Read on to learn more about it.

What is TPD Insurance?

TPD insurance, or total and permanent disability insurance, is a type of insurance that gives you financial coverage if you become permanently and totally disabled, prohibiting you from working like normal. 

The TPD insurance policy helps give you a financial safety net when you can no longer support yourself because of your disability. As a lump sum, the support can help cover ongoing care costs, medical expenses, utility bills, and other living expenses.

The definition of total and permanent disability varies depending on the insurance policy, but it generally covers cases wherein the insured person can’t perform a job or undergo an education or form of training.

This insurance payout is in the form of a lump sum once the claim gets approved.

You can file two types of claims: occupational TPD claims, which involve injuries sustained during work, and non-occupational TPD claims, which involve injuries sustained outside of work.

Possible Conditions for a TPD Claim 

If you’re diagnosed with the following conditions, you may be eligible to claim from your TPD insurance coverage. 

  • Mental health conditions: If you have a mental health condition that’s severely affecting your ability to work, such as depression, PTSD, or anxiety, you may claim benefits from this insurance policy.
  • Pregnancy: Pregnant individuals who aren’t able to work can claim benefits.
  • Death: If you are directly related to a person who has passed because of injuries, you can claim benefits.
  • Chronic illness: If you are diagnosed with a condition that’s stopping you from working, such as cancer, diabetes, or heart disease, then you may be eligible to claim benefits for this insurance coverage.
  • Physical injuries: If you’re a victim of an accident or have sustained an injury of any sort, such as injuries in the brain, neck, or back, you can file a claim from your insurance policy.

How to Purchase TPD Insurance?

First, seek various TPD insurance policy providers and narrow down your options to the best one. Review their terms and conditions and choose an insurer to partner with. Individuals who want to receive TPD benefits will need to qualify as permanently disabled. 

For clarity’s sake, permanent partial disabilities are types of disabilities that prevent a person from working full-time for the rest of their life. Total permanent disability refers to a case wherein the individual won’t ever work again.

Tell the insurer about your age, job, medical history, lifestyle, and family history.

It’s important to be truthful when answering these questions. Being dishonest can lead to the cancellation or rejection of your insurance policy or a decline in claims.

If the insurer omits some questions regarding your status, such as your medical history, it may indicate that their policy offers narrower coverage plans.

Once you’ve done all these, you just have to wait until they send you a letter stating your approval or rejection. If approved, you have to pay a monthly premium as indicated by the letter to continue to have coverage.

How to Increase Odds of Successfully Claiming a TPD Payout

To enhance your likelihood of successfully claiming money from your insurance coverage, follow these tips.

  • Gather and organise evidence: You must prove that your disability—regardless of whether it’s physical or mental—is total and permanent. A doctor and TPD lawyer’s note can help provide supporting evidence for your case.
  • Be honest: It’s imperative that you only provide truthful information to your insurer. Any wrong information can be a strike against you in getting a successful payout.
  • Follow instructions: Insurers have different methods in the lodging process. Review specific internal policies and follow them. Call a representative from their company if you need assistance.
  • Look for professional help: Instead of doing all the filing work on your own, you can contact a TPD lawyer, a doctor, or a financial expert to help act as a professional consultant to help you succeed in getting a payout.

If or once you’ve received your TPD payout, you need to ensure that you’re paying the right taxes for your claim. This financial calculator from Curo can help you get a tax estimate given your TPD payout amount and other relevant factors.

Is TPD Included in Superannuation?

Fortunately for most employed Australians, you already have a basic level of TPD insurance and life cover in your super fund until you reach 65 years old. You also have basic income protection insurance.

That said, the amount is relatively lower than having a separate TPD insurance policy that you’ve sought out yourself. As such, be sure to review the terms and conditions and see if the level of TPD coverage in your super fund is enough for your needs or not.

Why You Should Have TPD Insurance

Paying for TPD insurance may seem like an unnecessary expenditure, especially when you’re a young or middle-aged professional with an active and healthy lifestyle. 

However, unforeseen accidents and health issues can occur anytime before your senior years. Such accidents have happened to people who didn’t have ample TPD insurance coverage—causing lifelong financial burdens.

Having a TPD insurance policy is advantageous primarily because it provides financial protection and income replacement inexpensively. In dire circumstances, a safety net for medical expenses reduces the financial burden on your family or caregivers. Moreover, it aids in clearing ongoing debts, liberating you from liabilities and enabling focus on health. Additionally, it covers rehabilitation costs, facilitating professional management of disabilities. Finally, even in the event of no severe injury, the insurance offers peace of mind.
Ensuring financial security for you and your dependents.

For families with minor children, this is enough of a reason to consider spending a little bit for this added protection.