When comparing the insurance options available to Australians, it is essential to give due consideration to TPD insurance. But what is it, and why do modern individuals need it? TPD refers to ‘Total Permanent Disability’ insurance, and, as the name suggests, it provides cover for the policyholder if they should be unlucky enough to find themselves in that state for any reason. There are some eligibility criteria and other key factors to consider, so let’s take a closer look at TPD insurance and its advantages and disadvantages.
Who is eligible for TPD insurance?
TPD insurance comes with a list of exclusions and factors that affect the cost of premiums and even the amounts payable if a legitimate claim is made. TPD insurance is only available to Australians who are:
Gainful employment is deemed an ongoing event whereby the policy applicant receives regular payments for any work and can exist self-sufficiently. When assessing an applicant’s eligibility for TPD insurance, most insurers will require proof of this status through payslips, bank deposits, etc.
Aged between 19 – 62
If you are below 19 or above 62, you are unlikely to find a provider who will offer TPD insurance. There may be cases where you can apply for an adjusted version of TPD insurance but can expect fierce premiums and heavily amended terms.
Other significant factors affecting TPD insurance policies
TPD insurance also has some other criteria, mainly surrounding the life experiences any individual subjects themselves to and how likely they are to result in a claim. Those contributing factors are:
Health record and family history:
Although you are unlikely to be asked to submit to a medical check, if you have any pre-existing medical conditions or a family history of hereditary diseases, you are duty-bound to disclose them. Failure to do so will almost certainly be discovered in the event of any claim, and your policy will be declared null and void. It is better to have no TPD insurance than to pay years of premiums for one you can never claim against because you withheld vital information. Honesty is critical, and the consequences of failing to comply are harsh.
The list of occupations considered high-risk may vary slightly from one insurance provider to another, but if in doubt, you should check with them before assuming you have standard access to TPD insurance and that the premiums will be as advertised. Dangerous jobs might not preclude you from coverage entirely but will drive the premiums upward and attract other caveats and conditions. If you have any of the following occupations, it is safe to assume you will need a more extended conversation with your chosen providers before being offered TPD insurance:
- Heavy industry/structural iron/steel worker
- Construction trade worker
- Oil worker
- Aircraft pilot/flight engineer
- Electrical power-line installer/repairer
If you regularly smoke, drink alcohol, or take recreational drugs, your potential insurers want to know about it. None of those will likely mean you cannot purchase a TPD insurance policy, but you can expect to pay more for the privilege. Insurance companies have a reputation for ruthlessness, but it is not always deserved. They are prepared to listen to reason, and if your circumstances change for the better, you may be entitled to lower premiums and can make an official request for an alteration. Some changes that insurers often consider positive include:
- Demonstrable health and fitness regimes
- Cessation of harmful habits
- Occupation change
- Abandoning risky pastimes
If you already have existing TPD insurance and can claim any of those, contact your provider and ascertain their policies regarding changes and any evidence they might require.
The clue is in the name, and any dangerous pastimes you regularly participate in are of interest to the people who will have to pay you a large lump sum if you have a severe accident. Activities to be aware of include:
- Motorcycle riding
- Mountain climbing
- Scuba diving
There are bound to be others, so check with them and declare anything you are unsure about. Again, none of this is likely to mean you are refused a TPD insurance policy outright; it’s just that you will have to pay more to get one. Read More on Wikipedia.
Conclusion: Do you need TPD insurance?
No answer can address the myriad factors and individual circumstances affecting each person’s life and their need for TPD insurance. Superannuation fund insurance coverage is not always as impressive as it might be, and anybody relying solely on it in case of disaster may be in for a nasty shock. Suppose you can afford the premiums for TPD insurance, which may be much less than you imagine. In that case, it’s hard to think of any valid reasons not to take out a policy and fully protect yourself against the horror of being incapacitated.