Total and permanent disablement (TPD) is your financial back-up plan. It gives you the confidence to seize life’s possibilities, knowing you’ve made plans to secure your family’s financial future... just in case!
TPD insurance will provide a lump sum payment in the event you suffer an illness or injury which totally and permanently prevents you from working again.
Broadly speaking there are two definitions of TPD:
• Own occupation – The insured must show that they have a total and permanent disability that prevents them from working in their own occupation which they disclosed when applying for this cover. ‘Own Occupation’ is a more liberal definition of disability because, even if you can work in another occupation, you may still be eligible to receive disability benefits. Own occupation coverage is often more expensive, and may only be available to individuals who have a clean medical history and work in a relatively risk-free occupation.
• Any occupation – The insured must show that they are totally and permanently disabled and unable to work in their usual, or any other occupation for which they are reasonably suited by their education, training or experience. ‘Any Occupation’ is often the cheaper option, however it can be more difficult to meet the requirements of this type of disability definition.
Some insurers have a third definition available to clients – a ‘homemaker’ definition. Payment of benefits under this definition would be based on the proviso that the insured, through sickness or injury, is unable to do any normal physical domestic duties and will never be able to do so again.
Factors to consider when considering TPD insurance are:
• Make sure you have adequate coverage.
• Changes in your personal circumstances often necessitate the need for higher covers of insurance.
• There may be taxation consequences where a disability lump sum superannuation payout is made.
TPD insurance can provide a lump sum benefit which can be used in many ways, such as helping to pay for recovery and rehabilitation costs, such as refitting your home, enabling a partner or family member to reduce their work hours to care for you, paying for a professional carer or providing much-needed funds to repay debts, and creating an ongoing income stream for the future.
This is general advice only and does not consider your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial planner. Information is current at the date of issue and may change. TLK Wealth Pty Ltd, Corporate Authorised Representative No 1007998 of MyPlanner™ Australia Pty Ltd | AFSL 4345905| ABN 28 140 520 225|.
This information is of a general nature only and does not take into account your particular objectives, financial situation or needs. Accordingly the information should not be used, relied upon or treated as a substitute for specific financial advice. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither TLK Wealth Pty Ltd nor its employees, associated entities or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information. TLK Wealth Pty Ltd is authorised representative #1007998 of MyPlanner Professional Services Pty Ltd AFSL #425542.