If you’re like most Australians, you probably don’t think much about Total and Permanent Disability (TPD) insurance. But if you were to become permanently disabled and unable to work, how would you pay your bills and support your family? That’s where TPD insurance comes in. In this article, we’ll explain what TPD insurance is, how it works, and why you should consider getting it through your superannuation fund

What is TPD Insurance?

Total and Permanent Disability (TPD) insurance is a type of insurance that pays a lump sum if you become permanently disabled and are unable to work. This insurance is designed to help cover the costs of medical bills, rehabilitation, and ongoing living expenses if you are unable to earn an income due to a permanent disability.

How Does TPD Insurance Work?

TPD insurance typically pays out a lump sum if you are permanently disabled and unable to work in your usual occupation. The amount of the payout will depend on the level of cover you have and the terms of your policy. In most cases, you will need to meet certain criteria to be eligible for a payout, such as being unable to work for a certain period or being unable to perform certain activities of daily living.

Types of TPD Insurance

There are two main types of TPD insurance: Own Occupation TPD and Any Occupation TPD.

Own Occupation TPD

Own Occupation TPD insurance pays out if you are unable to work in your occupation due to a permanent disability. This type of insurance is generally more expensive than Any Occupation TPD, but it provides more comprehensive coverage.

Any Occupation TPD

Any Occupation TPD insurance pays out if you are unable to work in any occupation for which you are reasonably suited due to a permanent disability. This type of insurance is generally less expensive than Own Occupation TPD, but it provides less comprehensive coverage.

TPD Insurance in Superannuation Funds

Many superannuation funds offer TPD insurance as part of their default insurance package. This means that you may already have TPD insurance through your superannuation fund without even knowing it. However, the level of cover provided by default insurance may not be sufficient to meet your needs, so it’s important to review your insurance coverage regularly to make sure it’s adequate.

Benefits of TPD Insurance in Super

There are several benefits to getting TPD insurance through your superannuation fund:

• It’s convenient: Your insurance premiums are deducted from your super account, so you don’t

have to worry about making separate payments.

• It’s cheaper: Group insurance policies offered by superannuation funds are often cheaper than buying insurance independently.
• It’s easier to get: Because superannuation funds offer default insurance packages, it’s often easier to get approved for TPD insurance through your super fund than it is to get approved for insurance independently.
• Tax benefits: Premiums for TPD insurance paid through superannuation funds are generally tax-deductible, which can help reduce your overall tax bill.

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How Much TPD Insurance Do You Need?

The amount of TPD insurance you need will depend on your circumstances, including your income, your expenses, and your family situation. As a general rule, you should aim to have enough insurance to cover your living expenses for a period of two to three years.

Premiums for TPD Insurance in Super

The cost of TPD insurance through your superannuation fund will depend on a variety of factors, including your age, your occupation, and the level of coverage you choose. In general, premiums for TPD insurance in super are cheaper than premiums for standalone TPD insurance policies.

TPD Insurance and Pre-Existing Medical Conditions

If you have a pre-existing medical condition, you may still be able to get TPD insurance through your superannuation fund. However, your premiums may be higher, and your coverage may be limited or excluded for certain conditions.

How to Make a Claim on TPD Insurance

If you become permanently disabled and are unable to work, you can claim on your TPD insurance policy. The process for making a claim will depend on your policy and your superannuation fund, but generally, you will need to provide medical evidence of your disability and demonstrate that you meet the eligibility criteria for a payout.

Common Exclusions and Limitations of TPD Insurance

Like all insurance policies, TPD insurance policies have certain exclusions and limitations. Common exclusions include pre-existing medical conditions, self-inflicted injuries, and injuries sustained while engaging in high-risk activities such as extreme sports. Common limitations include waiting periods before you can make a claim and restrictions on the types of disabilities that are covered.

Alternatives to TPD Insurance

If you are unable to get TPD insurance or if you are looking for additional coverage, there are several alternative insurance products you may want to consider, including income protection insurance, trauma insurance, and life insurance.

Should You Get TPD Insurance in Super?

Whether or not you should get TPD insurance through your superannuation fund will depend on your circumstances. However, if you are looking for an affordable and convenient way to get TPD insurance, getting it through your super fund may be a good option.

Risks of Not Having TPD Insurance

If you don’t have TPD insurance and you become permanently disabled, you may struggle to pay your bills and support your family. This can lead to financial hardship and can make it difficult to maintain your standard of living.

Conclusion

Total and Permanent Disability (TPD) insurance is an important type of insurance that can provide financial protection if you become permanently disabled and are unable to work. If you have superannuation, you may already have TPD insurance as part of your default insurance package. However, it’s important to review your insurance coverage regularly to make sure it’s adequate for your needs.

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