No longer working and after Total and Permanent Disablement Insurance? Compare quotes and apply.
If you are no longer working, then you may be eligible for what's known as a 'non-working' or 'modified' TPD. If you currently own a policy for an occupation and stop work, then your policy will convert to non-working.
What is TPD insurance?
Total and permanent disablement insurance, also known as TPD insurance, provides policyholders with a lump sum benefit if they are unable to work because of total and permanent disablement. TPD insurance is designed to help policyholders manage their bills such as the mortgage, medical expenses associated with the disablement and also provide financial support for their family. TPD Insurance offers an extra level of protection and increased peace of mind for those who choose to take out a policy, be it as an additional option on their existing life insurance policy or as a standalone policy. It helps ensure that you and your family will be able to survive the financial impact of an unexpected injury.
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What are the common types of TPD insurance?
There are four main types of TPD insurance taken out in Australia, each of which has its own unique benefits and disadvantages:
If you are 'working'
- Any Occupation. Under an Any Occupation definition of total and permanent disablement, you are eligible for cover if as a result of your disability you’re unable to hold down employment in any capacity in a profession in which you already have experience or are qualified to work in. Premiums under for Any Occupation are cheaper than Own Occupation TPD, but this option only provides a reduced level of cover.
- Own Occupation. A TPD policy with this definition means you’ll be eligible for a benefit payment if your disability means you are no longer able to work in your own occupation. Own Occupation TPD is the more comprehensive form of insurance because policyholders are eligible for a benefit payment even if they are still able to work in an alternate profession. Own Occupation TPD Insurance is no longer available through Superannuation. This came into effect July 1, 2014.
If you stay at home or no longer work
- Home Duties. This definition applies for total and permanent disability policies designed specifically for homemakers and offers cover for those for whom domestic duties would be their full-time activity. Even if homemakers do not earn a salary, they still perform a host of vital duties in and around the home and to assist the rest of the family. Under a Home Duties definition, if you’re no longer able to perform your regular domestic chores you’ll receive a lump sum benefit. This type of cover can help with things such as home maintenance, childcare and the cleaning and cooking.
- Modified TPD. This option is generally not available when you first take out TPD cover but then becomes available when you reach a certain age. However, all TPD policies will convert to this definition until your 65th or 70th birthday. Under this definition, you will be eligible to receive a partial benefit if you lose your ability to perform, at a minimum, two tasks of daily living. Activities of daily living include dressing, eating and drinking, bathing, using the toilet, or leaving your bed without the assistance of a walking aid or wheelchair.
What is non-working TPD insurance?
The vast majority of TPD insurance policies will convert to 'non-working' TPD insurance cover once the policyholder is no longer working or reaches retirement age.
In what circumstances does non-working TPD insurance pay?
1. The life insured suffers the total and permanent loss of the use of:
- Two limbs
- The sight in both eyes
- One limb and the sight in one eye.
2. The insured person suffers a loss of independent existence and is unable to perform a specified number of activities of daily living.
These activities include:
- Using a toilet
- Drinking and eating
- Dressing and undressing
- showering and bathing.
3. The insured person to suffer cognitive loss.
Cognitive loss is defined as the total and permanent loss or deterioration of intellectual faculties and capacity, which requires the insured person to be under continuous care and supervision for at least six consecutive months. At the end of that six-month period, the person must be likely to continue to need ongoing care and supervision.
What are the benefits of TPD insurance?
There are plenty of benefits to taking out TPD insurance coverage in Australia. Life is unpredictable, and unfortunately disasters can and do happen at any time. Having some form of total and permanent disablement insurance in place offers peace of mind and financial security for your family. If serious illness or injury strike and keep you out of the workforce, you can rest safe in the knowledge that your family will be well placed to survive the loss of your income. The loss of a regular income can have a devastating impact, but a TPD benefit payment is designed to minimise the impact of your inability to work. To make things even better, you can use your TPD benefit payment any way you wish. You may want to use it to pay off your mortgage or manage other debts, or you could spread out the use of your money to cover regular ongoing expenses. Alternatively, you could use the funds from your payout to improve your quality of life, perhaps by making essential modifications to your home or car. You can use it to pay for medical treatment you might otherwise be unable to afford, or simply use some of your benefit payment to take a family holiday to help you all recover from a traumatic time. There are many benefits to taking out TPD cover, so compare your insurance options at finder.com.au to find the right policy for you.