TPD Insurance
TPD insurance pays a lump-sum if you suffer a permanent injury or illness that means you are no longer able to work. In most cases, you must be off work for at least 3 or 6 months before your claim can be processed.
- TPD cover is often bought as an optional extra with life insurance.
- Disability insurance is commonly offered in TPD insurance held within superannuation. In fact, 86% of the 9 million Australians who hold TPD cover do so via their super fund.
- An insurance policy held within super won't be fully underwritten; instead, they're offered on shared or group terms. This can be a barrier for claimants in some circumstances.
Trauma insurance
If you get seriously ill or are recovering from a severe injury, trauma insurance can pay you a lump sum. Typical injuries that trauma insurance can cover include the loss of limbs after a car accident, or major burns.
- Trauma insurance, sometimes called critical illness insurance, is generally not held within superannuation.
- It is offered as an optional extra with life insurance by three-quarters (12 out of 15) of the brands compared on Finder.
- Trauma cover pays up to $2 million as a lump sum if you get diagnosed with an illness that's listed in your PDS – as many as 50 conditions might be included.
Income protection insurance
Income protection can be thought of as insurance for your salary. It pays a monthly benefit if you become sick or injured and can no longer work.
- Income protection insurance will pay some of your lost income if you're unable to work because of a disability due to illness or injury.
- It will usually cover a maximum of 70%-85% of your pre-tax income. Most commonly, the benefit period is restricted to 2 or 5 years - or until you turn 65 in some cases.
- Just 35% of Australian said they'd be able to last more than 3 months if they lost their job tomorrow, according to Finder research.
