Last week’s blog covered the key features of income protection and trauma insurance.  This week we are focusing on Total and permanent disability (TPD) and life insurance.

TPD and Life insurance often go hand in hand together.  Both types of policies pay out a lump sum benefit when a claim is made.

Total and permanent disability cover

If you were to become unexpectedly permanently disabled the financial consequences can be extreme for you and your family.  Having a TPD insurance policy in place can help eliminate the stress of finances and expected medical expenses.

The definition of total and permanent disablement can vary from policy to policy but generally require that the insured is never able to work again in either:

– An occupation reasonably suited by education, training or experience.
– Their own occupation i.e. the occupation just prior to disablement.

You should be aware that you may not satisfy a condition of release to access insurance proceeds from a policy held within super where the policy is based on an “own occupation” definition.

TPD can be offered a single standard policy or can be taken out in conjunction with your life insurance policy. They can both be purchased as single policies or can be bundled together. Cover is normally made available as an ordinary policy or via superannuation when bundled with term life.

A TPD policy is an important part of your risk protection plan. The right amount of cover provides you and your family to clear existing debts e.g. mortgage, and car loans and to provides you with an income stream, funds for lifestyle changes such as home or car modifications due to any disability and pay for unexpected medical costs that may not be covered by your private health insurance.

TPD can also support an ongoing income stream to supplement any long term protection in place.

TPD insurance is only tax deductible when taken within your superannuation policy and is based on an occupation definition of disability.

Life insurance

Life insurance pays a set amount of money when the insured person passes away. The money goes to the people you nominate as beneficiaries on your policy. You can purchase life insurance within your super fund or from an insurance company directly. Majority of super funds offer life insurance and it is often cheaper than buying it separately through an insurance company.

Your life insurance payment can help your family pay any outstanding debts such as the mortgage, car loans and assist with dependents schooling and needs. It is important to be realistic about the amount of money you will need to if you were to pass away as the larger the sum of money the higher the premiums will be.

It is also recommended that you consider taking out a policy for you and your spouse. This will ensure that neither one of you aren’t left with huge debt that can’t be managed or paid off with a single income.

Life insurance premiums are only tax deductible when the policy is held within superannuation.

If you would like to discuss your insurance options please call Grange Business Partners today – we’re here to help!