Disability Insurance | All the facts Online
Disability Insurance, often called TPD or Total and Permanent Disability Insurance, is a form of insurance that provides a lump sum benefit if you are unfortunate enough to become disabled. Although what does it mean to become disabled?
In Australia there are numerous definitions of what constitutes a disability. Each insurer may offer slightly different disability policies so beware if you are shopping on price, as you may not be covered for a particular type of disability.
It may help to seek the advice of a financial adviser like CCA Financial Planners who will always include the provision for a disablement insurance policy to protect you and your family from financial ruin.
A disability can be a huge source of financial strain on your household budget. It can be difficult to maintain your living expenses with the extra medical and rehabilitation costs not to mention any modifications you may need to do to your home.
A disability insurance policy will provide the right financial solution.
What is disability insurance or TPD?
Disability insurance provides you with a lump sum benefit in the event you suffer a total and permanent disability, TPD.
How much disability insurance can I buy?
You should consider the following when determining how much protection you need:
- An amount of money to pay out any debts. We suggest at a minimum you include any debts like home mortgage, car lease, personal loans etc.
- In addition you should consider a lump sum of money for you and your family to invest so you can live off the proceeds.
- Plus any medical and rehabilitation costs.
Need help or not sure on how to calculate the right amount of Disability Insurance you need? See our easy to use Life Insurance and Disability Insurance calculator, or speak to one of our advisers.
How should I set up my disability insurance policy?
Generally, the best way to purchase your disability insurance policy is in the form of a rider benefit to your Life Insurance policy. In Australia, an application for disability insurance is combined with a life insurance policy owned under a superannuation plan. One great advantage is you can use your super fund to pay your premiums.
Although from the 1st of July 2011, own occupation TPD will no longer be tax deductible by the super fund.
Therefore in some cases it may be better to own your disability insurance outside of superannuation and/or own the policy as a stand alone plan. This can be complex so speak to one of our advisers who can recommend the best way for you to own your policy.
Benefits of disability insurance?
To claim a disability insurance benefit you will need to satisfy the following definition.
Due to a sickness or injury you are unable to work in any occupation to which you are trained by education or experience.
Life and Disability Insurance providers vary their definitions of what determines a disability. However typical definitions would include:
- Own occupation – this is where you are unlikely to ever work again in your own occupation. This is easier to claim and therefore a more costly premium would apply.
- Any occupation – this is where you are unlikely to ever work again in any occupation to which you are trained by education or experience. This is easier to claim and the premiums are generally cheaper.
You may also qualify for a benefit if you suffer the:
- Loss of two of eyes, arms or legs or one eye, or one arm or one leg.
- Have been absent from work for a continuous six months due to an accident or sickness. Some companies now also offer a 3 month term.
Do I need disability insurance if I have income protection insurance?
The answer to that question is really dependent upon your situation and will vary for most people. Although in most cases we would recommend you have all types of personal insurance included in your financial plan. These include:
- Life Insurance
- Disability Insurance
- Income Protection Insurance
- Trauma Insurance
Disability insurance should not be confused with or is a replacement for income protection insurance. Disability insurance is really a long term disability insurance policy and will generally only pay you one lump sum benefit, whereas income insurance is a short term disability insurance contract and will pay you a regular monthly income until you are able to go back to work or you have reached the expiry of your benefit period.
Need to compare disability insurance quotes.
Disability insurers are always changing the features and benefits offered in their insurance contracts so the right answer really depends on what you are looking for.
Make sure when you speak to one of our advisers you explain exactly what you want to achieve. We can then help guide you in the right direction.
We offer a free online life insurance broking service that can compare disability insurance policies from AMP right through to Zurich. Here is a sample range of insurance benefits we have compared in the past.
As Financial Planners our service is not limited to comparing current policies like other internet brokers. We can also compare old discontinued disability insurance policies.
So make sure you enter your details in our life and total disability insurance quote form and we will provide you with the right advice, so you can make an informed choice.
Remember to include any additional information you may want us to consider.
How do I apply for disability insurance?
Well that’s easy these days with the assistance of electronic disability insurance applications.
Electronic disability insurance applications online provide ease of completion because:
- Questions are tailored to the insurance cover being applied for
- Clients cannot miss questions
- Specific medical questions can be asked at time of application
This has all contributed to reducing the time it takes to apply for your disability insurance policy.
Now underwriting decisions are faster with clients being offered disability insurance terms at point of sale on the phone and or internet!
Get disability insurance cover instantly!
Without doubt one of the key benefits of electronic applications is the fact that you are issued with a cover note or better known in the life insurance industry as – interim cover!
This is great, knowing that you have some level of protection whilst the underwriting process is taking place.
Although not all interim cover offers are the same so if this feature is important to you make sure you ask your adviser to provide a complete analysis.
Interim disability insurance cover is usually offered for 90 days or until the underwriter makes a decision.
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