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Total and Permanent Disability Insurance: What It is and Why You May Need It

Total and Permanent Disability Insurance can keep you from depending on others if you are permanently disabled.

Nobody wants to think about what would happen if they were permanently disabled. A lot of people say, “it will never happen to me” and don’t think twice about it until they suffer a serious injury. Sadly, it could happen to you.

Total and Permanent Disability Insurance: What It is and Why You May Need It

Ask yourself what would happen if you were suddenly unable to work. How would you live? Who would pay your bills? Do you have enough of a “nest egg” to take care of you if the unthinkable were to happen to you tomorrow?

With total and permanent disability insurance or TPD, you don’t have to worry about being broke and unable to work. So, what is TPD insurance?

What is Total and Permanent Disability Insurance?

TPD insurance is a policy that pays you if you suffer a permanent disability and are incapable to work; the disability can be caused by injury or illness. The policy is designed to compensate for lost income and to help you pay for extra medical and rehabilitation expenses that aren’t covered in your health insurance.

TPD insurance is available in two basic types: any occupation and own occupation.

An “any occupation” policy means that your disability must prevent you from working any job, whether it is inside or outside your field of expertise. In other words, the policy only pays you if you become disabled to a point where you are unable to do any job.

An “own occupation” policy means that your disability prevents you from working your current job, in which you have been trained and have experience. If you become disabled and can’t work your current job, it will start paying immediately. However, if you are able to receive training and work another job, benefits will end when the next job starts.

Benefits of TPD Insurance

Peace of Mind

Even if you never have to make a claim on your TPD insurance, you have peace of mind because you know that you are covered in case you are unable to work. This can remove a lot of financial stress for those who haven’t had the time to amass a retirement fund that is sufficient to provide a living.

Financial Protection

TPD insurance protects you from the serious consequences of a permanent disability. If you depend on your work income for living expenses, having that income taken away could have devastating effects on your finances. TPD insurance protects you by providing financial security and stability in case of disability.

Improved Quality of Life

For many who become disabled and unable to work, their quality of life can deteriorate quickly. Not only are they unable to create income, they also can suffer from a lack of self-esteem and difficulty performing even routine daily tasks.

The payout from a TPD policy can help refit your living space to compensate for your disability. It can also help with medical expenses and replace the income you are no longer able to make otherwise. You may even be able to take a trip or vacation and relax once in a while.

No amount of money ever fully compensates one for disability, but a TPD policy can certainly improve the quality of your life.

How Much Cover is Appropriate for You?

Everyone’s financial situation is unique; there is no “one size fits all” answer to this question. However, there are some questions you can ask yourself concerning your financial state to help determine what may be appropriate coverage for you at this time.

What is your income level?

Whatever your income level, you have become used to it. Your lifestyle probably reflects your current income level. You may or may not be providing for your family. Regardless, if you were to lose your present income, you would at least need to replace it to prevent a diminished quality of life.

How many dependents?

If you are taking care of a family, you may have future plans for your children, such as paying for their education. Make sure to take your dependents into consideration when determining appropriate cover.

What is your level of debt?

If you owe money, your creditors won’t care that you have just become disabled and can’t work. They may give you a month or two but they will still want their money. If you fail to consider your debt level, you could end up with less money than you think if you ever become disabled.

Approved Financial Planners

At Approved Financial Planners, we can help you determine how much TPD insurance is right for you. Call (08) 6462 0888.