What is TPD Insurance?
Total Permanent Disability (TPD) cover pays out a lump sum when you are permanently disabled due to a serious injury or illness. TPD insurance is in place to protect you financially in case you’re unable to work again.
What types of TPD insurance are there?
The types of TPD insurance on offer vary by insurer, but there are two main types to consider when picking out a policy.
Any occupation: You’re covered if you’re no longer able to work in any kind of job
Own occupation: You’re covered if you’re no longer able to work in your normal job
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Before he came to us, Frank was paying for three separate insurance policies that were costing him over $10,000 a year. He was frustrated and disappointed with his insurers but didn’t know where to start.
With the help from one of our Senior Advisers he was able to amalgamate his policies into one comprehensive plan. With a new yearly premium of $6,000, and an insurer that has paid out over $2 billion in claims to Australians over the past two years Frank’s family was better protected and he was paying less.
Frank has since returned to us and we’re helping him with his Income Protection claim. As he recovers from knee surgery this money will help him support his family while he’s unable to work.
After years of paying premiums to the same insurer Maggie found herself in trouble when they suddenly refused to renew her policy. Due to a change in her health and her finances, she was told that no insurers would protect her. That’s when she came to us.
Our advisers were not only able to get Maggie the peace of mind that an underwritten life insurance policy brings; they also helped her save a few thousand dollars on her yearly premium. She was even able to save on her out of pocket expenses by opting to fund the new premium through her SMSF (self-managed super fund).
Maggie is now in the process of upping her cover to include a Trauma Insurance benefit with the help of one of our Senior Advisers.
With our help she’s making the journey from uninsurable to fully protected.
Everyone’s TPD cover needs are different. There is no magic number for TPD cover, because it depends on your personal situation. However, here are some things to consider when working out how much TPD insurance you need.
Number of dependants: Estimate how many dependents you will have now and in the future, because your TPD insurance should cover their upkeep as well as your own.
Income: Think about both your current and future income; TPD cover will need to take its place if you are unable to work again.
Current insurance: Many people already have some insurance in place, either through their super or health insurance. Know what you’re already covered for and think about whether or not it’s enough.
Debts: Your debts will still be there even if you’re not able to pay them. Always factor in the amount of debt you have when working out TPD cover.
Your total and permanent disability insurance scheme will define what qualifies as a ‘total and permanent’ disability. These are usually things like the loss of the use of your limbs, loss of hearing, or loss of sight. Your policy will have certain criteria you need to meet before receiving your benefit, such as being out of work for a set period of time and not being expected to return.
TPD is not designed to cover short-term illnesses; this is something that can be covered through trauma insurance or income protection. As a result, most policies do require that a set period of time passes and that you have been through some rehabilitation. At this stage you should receive your lump sum benefit.
TPD insurance cost is related to your age, gender, lifestyle, and occupation. High-risk jobs or lifestyles will mean a higher premium, as will smoking. However, TPD is one of the least expensive types of insurance because it is fairly niche.
For example, a 35-year-old nonsmoking office worker could get insured for $1.5 million and pay an average monthly premium of $66.
The best TPD insurance depends on your individual needs, but it should fit into your budget and provide the cover you’re looking for.
Here are some tips for finding the best TPD cover for you:
Own vs. any occupation. Decide which type of TPD cover is more beneficial to you as this can make a big difference come claim time.
Weigh up the value. If you have TPD cover, be sure that it will provide the cover you need—too many Australians are underinsured.
Get professional advice. Compare policies with LIfeInsuranceComparison.com.au and you’ll get free financial support from an insurance professional, so you can make an informed decision on your cover.
Financial advice support: Get up to $3,000 back to pay for financial advice on top of your claim amount.
Partial and permanent disablement: Receive a lump sum benefit equal to the lesser of $750,000 or 25% of your sum insured, should you suffer the permanent loss or use of one arm, one leg or sight in one eye.
Premium freeze: At any stage you can opt to freeze your premium to keep it the same; your cover will be adjusted to reflect the difference.
Forward buyback: Optional add-on that allows you to increase your cover without providing further medical evidence.
Inflation Protection: Each year the amount of your cover goes up by 5% or at the rate of CPI, whichever is greater.
Cover Pause: Pause your cover for up to three months if you’re experiencing financial hardship.
Premium payment plan: Choose between stepped or level premiums.
Range of cover types: Choose from accident cover, illness cover, and/or sports cover
Everyone has a different idea of what cheap TPD insurance means, but it is really up to you. Here are a few different ways for you to find low-cost cover that fits into your budget:
Combine your cover. Discounts are often available when you purchase TPD insurance in conjunction with life cover, rather than as a standalone policy.
Check your super. It may be more budget-friendly for you to pay for part or all of your TPD cover through your superannuation.
Get in early. Premiums are typically lower the younger you are, and they’re guaranteed to be renewed with time—potentially allowing you to avoid higher costs for pre-existing conditions.
Shop around. Many insurers offer TPD insurance, and more competition could mean a better deal for you. Get your quote from LifeInsuranceComparison.com.au today to make finding TPD insurance easy and cheap.
In your 20s: Provides cover at a time when you are just starting your working life and are less likely to have the experience needed to diversity job options.
In your 30s: Adapting to the demands of a new disability and young family can be especially difficult, and TPD can help lessen the burden by providing a financial cushion.
In your 40s: When you’ve established your career and your family is growing, TPD can protect your finances even if you are permanently disabled.
In your 50s: TPD cover can provide the money to cover a carer at a time when it becomes increasingly tough for a partner or adult children to step in.