What is TPD insurance
Total and permanent disability insurance (or TPD insurance) is an insurance product usually found under your superannuation policy. Most superannuation funds offer a default level of cover for members, however, it is possible to obtain a standalone policy dependent on your desired level of cover and conditions.
Why should I get TPD cover?
TPD insurance can provide you with financial support when you are no longer able to work. The level of cover and entitlements varies between policies. The Product Disclosure Statement (PDS) should outline all the details available about the level of cover, how to access it and any exclusions.
Whilst the definitions of each individual policy can differ greatly, generally in order to make a claim on your TPD insurance policy, you must show that you are permanently unfit for your usual employment, or any other employment for which you are qualified, based on your education, training and experience.
The benefit is usually a lump sum payment, paid to you directly after the insurer determines you satisfy the conditions and definitions of the policy. Generally, it doesn’t matter how the injury or illness came about (with the major exclusion of self-inflicted harm) and TPD claims can be made in addition to claims under other injury claim schemes (e.g. motor vehicle accident claims).
There is usually a minimum waiting period before you can commence any claim, with some insurers requiring you to meet minimum work levels before you become eligible to claim on the policy. For example, some insurers require the policy holder to have worked for at least 12 months before a claim can be made on the policy.
Most TPD benefits are paid as a lump sum, but dependent on the type of cover, there may be some salary continuance or income payments made to you.
How much TPD cover do I need?
As everyone’s situation is different, there are no hard and fast rules as to how much cover you may need. However, to determine the best level of cover, the following considerations should be taken into account:
- Your current income, and any anticipated increases into the future - This is important as the TPD benefit is a payment to replace the loss of income you may experience if you are unable to work
- Your dependents, now and in the future
- Short and long term debts - such as car loans, mortgages and personal loans
- Your assets - If you own other property or shares, these may be able to be used as liquid funds in the future, reducing the need for a high TPD cover.
For tailored advice you should speak with your insurance broker to find out what insurance product is best suited to you.
If you need to make a claim, we recommend seeking early legal advice. For further information or discussion, please contact a member of the Insurance team at HopgoodGanim Lawyers.