Total and Permanent Disability Insurance (TPD) provides a lump sum if you suffer an illness or injury that leaves you totally and permanently disabled. TPD is designed to relieve the pressure financially.
What does it do?
It isn’t quite as simple as it sounds, but total and Permanent Disability (TPD) insurance basically pays out a lump sum if the insured person is unlikely ever to return to work in their own or similar occupation. Another clause states ANY occupation but we will look at that later.
What is the Benefit?
The benefit is a lump sum payment of the full sum insured you have chosen in the event that you are able to prove that you will be unable to return to work.
How much TPD do I need?
It would be almost impossible to exactly determine what cover is required for TPD, as everyone's circumstances are different and what they would like to achieve in the event of never working again varies. The best way to arrive at the sum insured is to work through different scenarios with your adviser until you feel comfortable that you will be adequately financially supported should you suffer a total and permanent disability.
How does the policy work?
The basic idea of a TPD policy is to pay a lump sum benefit to the life insured if they are unable to ever work again. This is an potentially complex insurance, and possibly one of the most litigated due to misunderstandings of policy definitions. Broadly speaking, there are two definitions which are worlds apart. They are “OWN” or “ANY” occupation definitions and all insurers offer them. Although wording may vary from insurer to insurer, the underlying difference is still the same. “OWN” means that you are unlikely to do your OWN occupation, whereas “ANY” means that you are unlikely to ever work in an occupation suited to by education training or experience. Waiting periods of between 3 and 6 months also vary between insurers.
Where to from here?
Following discussions with your adviser, they will make written recommendations outlining the policies and sum insured that will meet your current circumstances. Again care must be taken to understand the policies definitions. From there, a personal medical statement is normally all that is required to have the application process started, however, sometimes depending on your medical history, blood tests or a medical appointment may be required. From there, your adviser will liaise with you through to the insurer issuing your policy documents.
What happens if a claim is made?
In the event a claim is made, your adviser will try and make the process as simple as possible for you. Claim forms will need to be completed, identification documents, medical records and doctors report will need to be obtained and your adviser will help with this and liase with the insurer. The insurer has a dedicated claims team, and a claims assessor will be allocated to help you through this process.