Will your TPD policy pay out when you need it?

Advances in medical science mean your chance of survival after an accident or serious illness is much better than it was even 20 short years ago. But what will your quality of life be like if you can no longer earn an income? You will need money to pay off debts, support your family, pay medical bills, and fund your lifestyle.

Most life insurance policies will allow you to buy extra cover for just this event. It’s called a Total and Permanent Disablement (TPD) benefit. It’s usually offered to working people aged between 16 and 65, with policies also available for Homemakers. Cover can be arranged privately or through a superannuation fund. The benefit is paid as a lump sum.

Like all insurance policies, it’s important to understand when the benefit will be payable. This is particularly important with TPD cover where the insurer will pay out in the event that it is unlikely you will ever be able to work again. But what does that mean?

To qualify for payment you will generally need to have been off work for at least six months due to the disability. You will be required to lodge medical reports from your own doctors and be examined by the insurer’s medical specialists. Depending on the wording of the policy, the insurer will decide if you can work again in:

  • Your own occupation
  • Your own or a similar occupation or
  • Any occupation.

Some policies provide other definitions of disablement such as loss of limbs, blindness or inability to perform the activities of daily living.

There is a natural tendency to look for the lowest premium in selecting insurance. With TPD cover, being sure the policy definitions are appropriate for your own circumstances is absolutely vital. After all, there is no point having insurance that doesn’t pay out when you need it.