Before you opt for both income protection insurance and Total and Permanent Disability (TPD) coverage, you need to know precisely what each one offers. The difference between these types of insurance is how you are paid.
To decide whether or not you need (TPD) insurance and a policy to provide income protection, consider the following general information we have gathered for you. Many people are unaware they have TPD insurance coverage in their Superannuation Fund, so if you aren’t sure, always check.
TPD and Income Protection: Key Differences
TPD insurance and income protection insurance both offer you financial support if you contract an illness or injure yourself and you have an injury or permanent disability that makes it impossible for you to carry out your occupation.
Additionally, income protection insurance provides coverage for lost income due to various reasons, including medical expenses incurred during your recovery period. It’s essential to be aware of the waiting period specified in the Product Liability Statement (PDS) before you buy either insurance policy:
So, the key differences between these two insurances are how you are paid and the circumstances of your disablement as per the following:
- For example, some superfunds offer income protection insurance up to 70 per cent of your normal income, which is paid monthly if you cannot work for a long period after the end of your wait time of between two weeks and two years.
- In general, TPD insurance pays you a lump sum benefit if you are so injured that you are assessed by medical specialists as never likely to ever work again in your usual occupation.
Should I Have Income Protection Insurance & TPD Cover?
One of your most valuable assets is the ability to earn an income and support yourself and your family. When choosing income protection or TPD insurance policies, it’s crucial that you carefully weigh up your options to find the insurance coverage that best meets your requirements. Combining permanent disability insurance coverage with a financial security policy can save money.
However, it depends on your particular circumstances. For instance, if you have a comprehensive income protection policy that has a benefit period of up to age 65 or 70, it’s possible that you wouldn’t need as much coverage for permanent disability. It’s important to think about your obligations and liabilities before you decide and to seek professional advice.
Our experts at the TPD Helpline Australia work hard to help raise awareness about TPD insurance claims and offer sage advice, so don’t hesitate to contact them today.
Considerations Regarding TPD & Income Protection Insurances
Before you consider whether to choose Income Protection insurance, TPD or both, here’s a checklist of important considerations:
- Your income level and occupation
- Your financial obligations and debt level
- Your age and your stage of life
- Existing savings and financial resources
- Are you fit and healthy?
- Your risk tolerance
Your income level and occupation
Your insurance needs will be affected by the kind of work you do and your regular income. For instance, if you work in a high-risk industry or your job pays highly, you would be wise to consider income protection and TPD insurance, not to mention health insurance, to make sure you are adequately covered in case of unexpected injuries, illness or permanent disability.
Your financial obligations and debt level
The amount of income protection insurance coverage you need and the kind of insurance may depend on your financial obligations such as your monthly income and level of debt. If you have mortgage repayments or dependents, it can have an impact on how much insurance you need and which type is more appropriate for you.
Your age and your stage of life
Depending on how close to retirement age you are, whether you’re a young working person, have a small family or are middle-aged, your medical history, all affect the kind of income protection insurance coverage you will need.
Existing savings and financial resources
What financial resources and savings you have can also affect which TPD and income protection insurance you want or need. E.g., if you have another income stream besides your job or a substantial emergency fund available, it could mean you won’t need as much income protection coverage.
Are you fit and healthy?
Whether you are fit and healthy or have pre-existing health conditions can affect your eligibility for income protection and total and permanent disability coverage. The premiums will also be affected.
Your risk tolerance
Taking out both TPD and income protection policies for a monthly benefit and lump sum should you need to claim is a good option for some people. But others might take out a reduced amount and be willing to take on some of the risks while still having enough coverage if they suffer a serious injury or illness that leaves them with a severe disability.
Claiming TPD and Income Protection Concurrently
It’s possible to claim on both your TPD Insurance and your income protection insurance simultaneously, provided you have both policies and the premiums are up to date. But be aware that your income protection benefits could be affected by your TPD lump sum payment.
Some insurers’ income protection cover has offset clauses in the Product Disclosure Statement (PDS) that show how monthly income protection benefits are affected by any lump sum payment for the same permanent disability or condition. Check the details regarding offset clauses in your PDS before claiming on both your income protection insurance policy and your TPD insurance lump sum benefit.
Contact the TPD Helpline Australia Today
TPD and income protection insurance assessments consider your well-being, including your physical, psychological, and other health conditions. Thousands of Australians are unaware of their ongoing income protection entitlement and TPD lump sum benefit even though they are eligible.
The TPD Helpline assists people all over Australia to claim their superannuation TPD benefits. It’s always best to seek advice, so call us at the Helpline today on 1300 679 222 or fill in the online form.
