Total and permanent disability (TPD) insurance: What to know
Total and Permanent Disability insurance, lovingly known as TPD Insurance, isn't just jargon. It can be the safety net and your backup plan you never knew you needed. Let's dive into what TPD Insurance really is and why it's something worth considering.
What is it and why does it matter?
TPD is a type of insurance policy that gives you financial cover if you become totally and permanently disabled and cannot longer work. Think of it as a cushion that eases the worries that can come with a life-changing situation. We're talking about medical bills, ongoing care expenses, and all those financial commitments that don't take a break just because you do.
How it works
TPD insurance gives you a one-off lump sum cash benefit, rather than ongoing income support payments made over a period of time. It can cover events such as spinal cord injuries, or after the onset of illnesses such as cancer, heart disease, and neurological disorders like Motor Neurone Disease.
Total amount of claims paid for Total & Permanent Disability by MetLife Australia in 2022: $249.13M
Depending on the type of cover you choose, TPD can also give partial payments in the early stages of disablement or for less serious conditions. Basically, you can use the money however you want, whether it's paying bills or any immediate needs.
Here are some practical ways you can make use of the funds:
Costs of medical treatments - can help cover these costs, ensuring you receive the best care available.
Keeping up with daily expenses - can help you not compromise your day-to-day life and can provide financial support to help you maintain your lifestyle, covering expenses such as groceries, bills, and other essential needs.
Supporting your loved ones - we all want the best for our loved ones, even during challenging times.
Paying off debts - can help you pay off outstanding debts, relieving some of the financial stress and allowing you to focus on your well-being.
Hiring a carer or support at home - sometimes, disabilities require additional support in the form of caregivers or at-home services.
Travelling interstate for medical care - can help with the costs of transportation and accommodation, regardless of its location.
How much do you need and the cost
Your insurance cover depends on a bunch of stuff unique to you. We're talking about your income, your stash of savings, your family situation, and all those everyday expenses. And that's not all. Your financial situation, the cash you've tucked away, your investments, and even your health—they all play a role in figuring out the right cover for you. So, step one: take a good look at your own financial landscape and have a chat with your financial adviser.
TPD cover options are quite flexible. You can decide between two types of premiums: stepped or level.
Stepped premiums increase each year along with your age and the level of cover.
Level premiums generally remain more consistent, which can save you money in the long run.
When sorting out TPD insurance cover, consider the main risks that apply to your personal situation. Don't forget to check out the typical exclusions for TPD insurance too.
Read the financial product disclosure statement (PDS) for all the options available.