Insurance policies can undoubtedly be confusing to understand. More often than not, we focus on the key points, skim the rest, and sign. However, there are some vital points that we should all consider before handing over our cash. Many Australians will have basic cover on their Super but, most of the time, basic isn’t enough. One of the most important things to get right is your TPD. Today, we want to explain what it is, what it covers, and why you must ensure it is included in your insurance policy.
Worrying about the future
At some point in our lives, we all worry about the future. The fact that nobody knows can make it all a little bit daunting. It is important not to get swept up in this rabbit hole and do what we can to help us relax and enjoy our life. That is why total and permanent disability insurance (TPD) is so important. Nobody wants to think of the worst possible scenarios, but that doesn’t mean they can’t happen. TPD will ensure your future is taken care of, whatever happens.
What should a good TPD policy include?
One thing you should understand when deciding on a TPD policy is that there are two very different definitions of disability. One defines it as something stopping you from working altogether, and the other defines it as stopping you from working in your own/current occupation. When reading the terms of your insurance policy, it is a smart idea to double-check, making sure it is the former. This will ensure your policy is willing to pay out rather than find reasons not to.
Though claiming your TPD depends entirely on the severity of an injury or illness, the list below should give you a good idea of when to expect a payout.
- Spinal injuries
- Loss of limbs
- Brain Trauma
- Heart Attack
- Severe Burns
- Major Organ Transplant
Additional considerations and FAQs when purchasing TPD
Is it covered through super or other life insurance policies? – The simple answer is it probably is covered, but there are things to look out for. It is better to purchase a separate TPD policy to ensure full coverage.
What is the average waiting period for a payout? – The average waiting period is 3-6 months, but you will also need to be suffering from a disability for the same period on top of this.
Does it matter about age when purchasing TPD? – All insurance premiums concerning health go up with age, but there are options to pay a fixed rate throughout. However, this method of payment may start higher than others.
Does TPD cover anything else other than the inability to work? – Some policies might include coverage for rehabilitation, home modifications, training for a new job, etc. If you want these additional benefits, talk to your insurer or insurance broker.
Does TPD pay a lump sum? – Yes, after the waiting period, and as long as everything goes smoothly, you will likely be paid in one lump sum.