Feb 08, 2023  | Tags: TPD, insurance

Our insights

Total and Permanent Disability Insurance is a specific type of insurance designed to protect you and your family in the event of your total and permanent disability.

It may be taken up as an option as part of your life insurance cover. Alternatively, it may be automatically applied to your superannuation plan.

The key is to know whether you and your family have enough protection in the event that you need it.

TPD insurance differs from Income Protection Insurance which normally provides you with a monthly payment while you are unable to work, up to a certain age. It also does not require permanent disability to pay out.

Conversely, TPD insurance pays you a lump sum should you become unable to work again.

Do you need TPD insurance? No one knows what the future holds. But TPD insurance could well save you from losing everything.

Why you may need TPD insurance

TPD insurance can be ideal for families that, like many Australians, have a lot on the line. 

Imagine you are in your mid-40s or 50s. You have two kids both at well-to-do colleges that cost up to $30,000 per year apiece.

You work long hours in a high-powered job and your $180,000 per year salary helps service the school fees, the lifestyle you and your partner enjoy, and the $400,000 outstanding on the mortgage.

But in an instant, it could all be under threat. You suffer a debilitating injury that leaves you unable to return to work and ends your career.

You spend several months in hospital and face many more in rehabilitation learning to walk and talk again.

Your health insurance covers the bulk of the expensive hospital and rehab fees but your wife has had to quit her part-time job to look after you.

The school fees are overdue, other bills are piling up, you’ve liquidated all of your remaining assets to meet the mortgage payments but interest rates and the cost of living continues to rise and you now face the harsh reality of having to sell your home just to stay afloat.

It sounds like a nightmare, but for some families, this has been a reality.

With TPD insurance, a lump sum payout would solve all of your financial woes in one hit, protecting you and most importantly, your family.

What to consider when buying TPD insurance

If you decide to explore your TPD insurance options there are some key considerations.

Firstly, you’ll need to assess all the types of cover you already have, including any tied to your superannuation and life cover. There may also be a component available to you via your workplace, should you fall ill.

Consider whether or not you have enough to take care of your family in the event of it being needed, including weekly living expenses, school fees, mortgage repayments, medical costs and other debts and financial commitments.

If not, you may wish to buy more cover.

There are two types of TPD insurance.

- one that covers you when you cannot work again in any occupation

- one that covers you when you cannot work again in your own occupation

Carefully consider how comprehensive the policies you have are and the level of cover you need and want.

If your policy only pays out if you cannot work again in “any” occupation, you may be denied a pay out if you suffer an event and are deemed capable of earning an income in an alternative and potentially less attractive occupation.

Get advice today

Your income earning potential is key to your ability to create wealth and it should be protected at all costs. But wading through insurance options, red tape and fine print can be intimidating.

That’s where Calder Wealth Management can help.

One of our specialist advisers at CWM can analyse your financial position, needs and obligations, and recommend an insurance strategy based on your circumstances and goals.

CWM are financial experts who can help you make the best financial decisions for your long term interests.

We can also manage your wealth building strategy and review it to ensure it remains balanced and diversified in an ever-changing economic climate.

There really is no substitute for quality financial advice from someone personally invested in your future.

At CWM, we pride ourselves on leading our clients into the future with structure, financial stability and confidence.

Contact us today to discuss all of your financial needs and concerns.

Written by Marisa Maiolo

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Calder specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance.