Total permanent disability TPD insurance is not something many people give much thought to, especially when they are young and healthy. And yet it represents one of the most astute, game-changing decisions possible if things do not go according to plan and disaster strikes. So, what exactly is TPD insurance, and why should Australian workers consider it?
What is TPD insurance?
The generally accepted definition of TPD insurance is as follows:
Total permanent disability insurance is a specific branch of health insurance valid when the policyholder is left ‘totally and permanently’ disabled. The reasons for this disability vary but often include workplace accidents, illness, or other forms of debilitating injury.
TPD insurance acts as income protection, replacing lost earnings every month. Certain caveats and potential exclusions exist, so awareness of the terms and conditions of any policy is crucial before signing on the dotted line.
Do I need TPD insurance?
When it comes to the subject of any insurance, the question of needing it is a difficult one. We hope never to need to make a claim, and that sense of optimism can sometimes be at odds with the inherently pessimistic attitude of preparing for the worst. There are several helpful questions to ask yourself if you feel you might not require TPD insurance:
- Do I face unavoidable risks and hazards at work?
- Is my lifestyle generally well-balanced and healthy?
- Are my hobbies and pastimes dangerous?
- Could I afford to pay my medical bills and ongoing costs if the worst happened and I was left disabled?
These are important questions to ponder, relevant to your actual TPD insurance policy, should you apply for one. It is useful to think of any insurance policy as the difference between riding a motorcycle with or without a helmet. The chances are we won’t fall off, and the experience will be all the more gratifying for feeling the wind surging through our hair. But there remains a chance we will suddenly find ourselves sailing through the air unprotected, perhaps through no fault of our own. If that happens, the helmet was a small concession to have made that drastically minimised the effects of a bad outcome.
Eligibility for TPD insurance
To be eligible for TPD insurance, you must be:
- Gainfully employed
- Aged 19-62
You must fully disclose any of the following:
- High-risk occupations
- Lifestyle choices
- Overall health record, pre-existing conditions, and family history
Final thoughts
Insurance is always a balancing act between the likelihood of a particular negative situation (with its financial implications) and the ongoing costs of the premiums. Some people cannot bear to think they might be unprotected in a worst-case scenario and crave the peace of mind insurance brings. Others prefer to take life as it comes and let the chips fall where they may. Some individuals would love to feel the weight lifted from their shoulders, but cannot afford the premiums. It is therefore impossible to offer advice applicable to all. This is where you need the assistance of a reputable insurer or independent financial advisor. They can give you an honest appraisal of your exact circumstances and make recommendations on the types of insurance policies you should consider, including TPD.
