There is no better feeling than knowing all the different aspects of your life have finally started to come together. You’ve thriving in the career you’ve always dreamed of, you’ve found a great partner, you’re set up in accommodation you’re happy with, you’ve got a nice work/life balance, you’re staying healthy and life seems to be running on all cylinders – just the way you want it to.
Humans are optimists by nature – we prefer to think that good times are just around the corner – even when we’re struggling a bit. This state of mind is healthy and productive, but it does have one unfortunate side effect: the “it will never happen to me” syndrome.
Permanent disability can happen to anyone
No matter what your age or circumstances, life can throw some pretty serious blows in your direction when you least expect it. Major car crashes, debilitating sports injuries, falls, head trauma and life-changing illnesses are risks that we all face in our day-to-day lives. We don’t like to think about these sorts of situations, but they exist, and the best thing we can do is try to be better prepared for them financially. The problem with believing “it can never happen to me” is that today, right now, it’s happening to someone somewhere in Australia, and it’s pretty likely they were thinking the exact same thing. We need to be realistic about the fact that sometimes bad things can happen to us – and we need to be ready if they do.
What is TPD Cover?
TPD (Total & Permanent Disability) cover is normally offered as an optional extra in conjunction with your life insurance policy. It pays you a lump sum benefit if you suffer a total and permanent disability that results in your being unable to work in any occupation or manage your home. It can apply to both the homemaker and the major breadwinner in the household. This benefit is useful for covering ongoing medical and rehab costs and necessary modifications to your home or car. TPD Cover can help you fulfil your financial commitments such as paying outstanding debts, managing everyday expenses etc.
Do I really need it?
Disability is a fact of life. In 2012, there were 4.2 million Australians (18.5% of the population) with a disability of some kind1. The important question is this: if for some reason you became unable to work again or manage your home, how would you provide for yourself and your loved ones? The financial burden of supporting your current lifestyle may be considerable, so consider how would you manage it if something happened to you. Standard life insurance policy is designed as a Death Benefit; it doesn’t usually cover permanent disability. And if you have opted for Trauma Cover with your policy, that’s great – it’ll give you a lump sum for very specific, life-threatening medical conditions that might include stroke, heart attack, certain types of cancer and a number of other listed conditions. But it’s vital to understand the difference between Life (Death Benefit) Cover, Trauma Cover and TPD Cover: only TPD covers you for total and permanent disability.
How do I get some TPD cover?
Life insurance providers normally provide an additional TPD option with standard life insurance policy, which you can add at any time. Each insurer is different, but in many cases you’ll be able to get TPD as a full-time worker, part-time worker or homemaker, with benefits ranging from $50,000 to $1 million or more, depending on age. Depending on the insurer, TPD insurance might feature worldwide 24/7 coverage, automatic inflation protection, a cooling-off period and no requirement for medical or blood tests. Terms, conditions, limits and exclusions apply to every type of insurance, so make sure you read the relevant Product Disclosure Statement for full details of what’s covered. Keep in mind that TPD Cover is not normally an automatic part of a standard (default) life insurance policy – it’s an additional Optional Benefit.
Life insurance claims – some facts
According to TRS (The Risk Store), Australia’s life insurance industry paid out over $5 billion against over 85,000 claims in 2013. TPD (Total & Permanent Disability) insurance paid out over $898 million to 10,756 claimants. Based on that year’s statistics, the leading causes of life insurance claims were:
- Death Benefit claims: 1. Cancer 2. Heart Disease 3. Respiratory Disease
- Trauma claims: 1. Cancer 2. Heart Disease 3. Neurological Disorders
- TPD claims: 1. Musculoskeletal 2. Cancer 3. Mental Illness2
With life insurance, there are distinct types of cover for very specific situations. No single cover does it all, but fortunately many insurers offer discounts for combining different types of cover (and Optional Benefits) together.