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Total and Permanent Disability Insurance

April 4th, 2012 | Posted by Editor in Articles

Total and Permanent Disability insurance also known as TPD insurance is a type of Life insurance product offered by insurance companies to Australian residents. The purpose of Total and Permanent Disability insurance is to provide financial support to the insured and their family members in the event the insured person suffers an illness or injury that renders that person totally and permanently disabled.

In the event of a claim payout being made for a TPD event funds could be used for the following
• Medical expenses and rehabilitation costs
• Reduction of debt
• Ongoing living expenses
• Modification to home and vehicle

TPD insurance plans are offered by most of the leading insurer’s in Australia to persons above the age of 18. This type of policy can be taken out as standalone or in conjunction with other protection plans including Term Life, Trauma and Income Protection insurance.

Is TPD different among various Insurer’s?

TPD policies are generally quite similar among the leading insurer’s, but may differ in some of their core features including definition of disability, period of disablement and occupational risk, when considering this type of insurance it is always best to read the insurer’s Product Disclosure Statement (PDS) and or seek advice from a licensed Insurance adviser.

Occupational Definition “Own” or “Any”

TPD insurance can generally be taken out with choice of the following definitions which will be used in the event of claim
• Any Occupation definition, if you are permanently disabled and unable to perform any occupation that you are suited to by training, experience and education
• Own Occupation definition, if you are permanently disabled and unable to perform duties specific to your occupation
There are also options for Home makers who may require this type of insurance.

TPD Insurance How much does it cost?

TPD insurance premiums are generally competitively priced in relation to other Life insurance products, premiums may vary due to the following factors
• Gender
• Age
• Smoking Status
• Occupation

Is there a difference between Income Protection insurance and TPD insurance?

There are differences between the two, TPD insurance is designed to be used for any long term disabilities and is usually paid as a lump sum, premiums are not usually tax deductible unless they are inside a superannuation fund.

Income protection insurance is designed for both short and long term disabilities based on the benefit period of the policy, usually paid as a percentage of the insured’s earnings on a monthly basis, premiums are usually tax deductible.

Total and Permanent Disability insurance should be considered as a vital part of any insurance protection plan either as a standalone option or as a rider to other products for those who are looking for a more cost effective option.

This material is not intended to constitute personal advice, and must not be relied on as such. This information has been prepared without taking into account your objectives, financial circumstances or needs. Before making a decision based on this material, you should consider the appropriateness of this material having regard to your own objectives financial circumstances and needs. You should consider obtaining independent advice before making any decision.

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