Double TPD Cover

After life insurance with added cover for disability or trauma? Consider a double TPD or trauma policy.

For complete life insurance cover, a combined policy may be the way to go. Instead of having separate policies for each type of cover you can get them all in one, which is usually more cost-effective. In addition to life cover, you can include:

  • TPD insurancepays out in the event of total and permanent disablement
  • Trauma insurancepays a lump sum in the event of specific health events, such as heart attack

Reduced cover when you claim

Even though you will typically have different sums insured for each of these policies, any claims you make will reduce the funds available for other cover. For example, if you have all three policies, a $50,000 trauma claim will also reduce your TPD and life cover by $50,000.

What options do I have to get around this?

If your life cover is reduced by previous claims, it might no longer be enough. There are two main ways around this:

  • Double trauma and TPD options. With these, your life cover won’t be decreased following a trauma or TPD claim, depending on which double option(s) you choose.
  • Life insurance buy-back. This option lets you purchase additional life cover to top up the amounts used by a claim.

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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How do double trauma and double TPD work?

Including the double feature in your policy will typically cost more than going without, but in the event of a TPD or trauma claim it can ensure you have enough life cover remaining for later, as well as delivering other cost savings further down the track.

Example: Germaines combined policy

1. Combined cover is taken out

For example, Germaine takes out a combined life insurance policy with:

  • $800,000 of life cover
  • $300,000 of TPD cover
  • $200,000 of trauma cover

2. Germaine suffers a heart attack

Later on, she suffers a heart attack and makes a TPD insurance claim which pays out the full $300,000. Because it’s a combined policy, her life and trauma limits are also decreased by this amount. Now she has:

  • $500,000 of life cover
  • Zero TPD cover
  • Zero trauma cover

3. After payment: Double trauma option vs without it

Without the double trauma option, these limits will apply for the remainder of her policy. With the double trauma option, it will get topped back up by the claim amount.

Once the double trauma feature activates, she will have:

  • $800,000 of life cover
  • Zero TPD cover
  • Zero trauma cover

Conditions that may apply

Some conditions and policy variations may affect how double trauma or double TPD options work. These can have a significant impact on the effectiveness of your policy as a whole, as well as the double features.

  • Age limits. Some policies will not apply the double feature after you reach a certain age. For example, a policy might specify that your life cover will not be topped up for trauma claims that are made after the age of 70 and TPD claims made after the age of 65.
  • Survival periods. Some policies will only instate a survival period if you have selected the double option, or will have a longer one if you choose this option.
  • Reduction of cover. If you select the double option, some policies may automatically reduce other cover to $0 as well, even if you would otherwise have limits remaining. For example, if you have $300,000 of TPD cover and $200,000 of trauma insurance, you might have $100,000 of TPD cover remaining after a trauma claim. However, if you choose the double option, your policy might automatically reduce your TPD cover to $0 as well.
  • Loss of indexation benefits. Some policies may withdraw indexation for inflation benefits after the activation of a double option.
  • Loss of future insurability guarantee. Some policies may withdraw a future insurability guarantee after the activation of a double option.
  • Different requirements. Combined life insurance policies will usually have minimum and maximum amounts of cover available. These may be different if you select double options.
  • Full claims only. Double options will generally only activate in the event of a full claim, where your sum insured for that type of cover is reduced to zero. A single partial trauma or TPD claim will not typically activate the double feature, but multiple claims that total 100% of your trauma/TPD benefits typically will, even if there’s a long time between them.

The conditions and exact benefits available with double options will depend on the policy you choose.


Should I get double TPD or trauma?

All policies are different, and the conditions and benefits of double options also vary between policies. If the policy terms are right for you, buy-back or double options can be important layers of protection.

This is because life insurance is generally designed to be held for life, where maintained policies will pay out at some point. Your sum insured should generally be based on how much you think your family will need (you can use life insurance calculators to help add it up) instead of simply being a round number, or as much as you can afford.

As such, losing your life cover funds to prior TPD and trauma claims might leave you without enough cover for your family. Generally, there are only three ways around this, with double options being a potentially cost-effective choice.

  • Choosing separate policies can avoid this problem, but can also be expensive and inconvenient.
  • Life insurance buy-back options can give you the choice of purchasing top-up cover, but you need to wait 12 months after a TPD or trauma claim to do so, when the odds of passing away from the initial injury or illness have lowered.
  • Double TPD and trauma options are a way of automatically topping up your term life cover after a claim, with a much shorter waiting period than buy-back, and with waived premiums on the topped-up portion of your life cover going forwards.

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Andrew Munro

Andrew writes for finder.com, comparing products, writing guides and looking for new ways to help people make smart decisions. He's a fan of insurance, business news and cryptocurrency.

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