Total and Permanent Disability insurance, better known as TPD, is a type of insurance individuals can purchase and claim, in the case that they sustain a permanent disability or injury rendering them unable to work.
Occasionally provided by employers (for more dangerous occupations such as minors and construction workers), TPD insurance is a worthwhile insurance to consider for those who would like a financial safety net in the case that they become unemployed due to a permanent injury or illness.
There are different types of TPD insurance and claims available to purchasers:
- Protection with your own occupation. This concerns individuals who sustain an injury or illness which render it impossible for them to continue working in their current profession. As the more expensive of the two options, this type of TPD insurance may be easier to claim as the possibility of such circumstances occurring is higher.
- Protection with all other occupations. This concerns individuals who sustain an illness or injury which result in them being unable to work any job forever. While this type of TPD insurance is cheaper, it is much more difficult to claim in comparison to the former, as its circumstances are much less likely to happen.
When considering whether or not to purchase TPD insurance, individuals should consider the following:
- You and your family’s lifestyle expenses (whether you need to work your current job to be able to sustain your lifestyle)
- Your debt (whether you can pay off your existing debt without income from your current job)
- Your ability to pay for medical and rehabilitation fees (whether your current savings can pay for any medical emergencies should they occur)
- Your retirement funds (if you have enough retirement funds, even without your current income stream).
There are also two different ways (or premiums) you can purchase TPD insurance. These purchasing methods are worth considering, as a particular one may be more beneficial for your circumstances.
- Stepped premium. In the case of a stepped premium, your potential payout amount is recalculated at each policy renewal, and is increased annually due to the fact that your chances of sustaining a permanent injury increase with age.
- Level premium. A level premium involves a higher purchase price (than stepped premiums), which diminishes over time.
For those who have additional questions regarding TPD insurance, and whether or not TPD insurance is worthwhile purchasing for their individual circumstances, be sure to contact a TPD insurance agent to have your questions answered.
