Why have Total and Permanent Disability (TPD) Insurance?

August 6th, 2012 by

TPD insuranceAlthough there is some overlap between trauma insurance and TPD, the claim that trauma coverage makes TPD unnecessary can easily be disproven, and the reasons why rest in the actual function of the TPD insurance policy.

It is important to bear in mind that anyone can find themselves permanently disabled due to illness or injury, and that disability can dramatically reduce the victim’s ability to live independently and care for themself.  Statistically, one Australian is diagnosed with a life-altering disability every 30 minutes. [i]

When asked for recommendations for purchasing a TPD insurance policy, the answers advisors give can vary. Some advisers recommend that TPD insurance policy benefits be enough to cover all debts and medical expenses. Others say it should cover the same amount as death or funeral insurance, while still others call for a TPD policy to be for as much as the policy holder can afford.

While it is widely accepted that TPD coverage is important in that it provides protection against some real potential risk to a large population of Australians, the questions begin to surface when the seemingly unlimited number of variations of TPD insurance policies are taken into consideration. Why are some illnesses and injuries covered while others are not, and how do providers determine what they will cover?  Most important, how aware are TPD insurance policy buyers of the gaps in coverage that exist, and how can they be better identified?

Insurance providers want to identify all areas of need when it comes to TPD insurance coverage, in order to improve customer confidence in the product. It also benefits providers to build a comprehensive base with unlimited flexibility that allows a TPD insurance policy to be tailored to the unique needs of each policy holder, both in personal scenarios and business scenarios.  For instance in personal situations, the total and permanent disability insurance policy takes into account the client’s current and future financial situation to address need if the insured becomes unable to work and earn an income. In business situations, the TPD policy takes into account the financial impact of the insured’s inability to work on the business.

Income protection insurance can provide needed cash to prevent a negative impact on the insured’s lifestyle and that of their family when the insured loses their income, paying out up to 75 percent of their earnings.

So why the need for TPD insurance? Because it protects the insured financially when expenses override the coverage of income protection and trauma insurance policies, making TPD insurance something that should be considered in addition to trauma and income protection policies.

Business need for TPD

When an individual is injured or becomes too ill to ever return to work, TPD insurance is the coverage that will pay out in a manner that addresses the permanence and totality of the insured’s medical problems.  Included in the business needs for TPD coverage are loan protection, business succession, and key person replacement.  Loan protection can be immediately identified, so the benefit amount recommendation can include all or part of a loan.  In the case of business succession and key person replacement, the financial impact is not readily known, so a logical formula can be devised to accommodate the impact.

When the insured discusses all the details thoroughly with a qualified insurance advisor, the range of potential impact can be distinguished and put in writing, leaving as little room for error as is possible when basing figures on future unknowns.

Personal need for TPD

From a personal standpoint, your total and permanent disability insurance policy should be set up in a way that provides for any financial impact that a major medical event would have on your family and your personal finances.  That includes recurring expenses – loan payments, utility bills, groceries, etc., and one-time or occasional expenses.

Where income protection insurance is in place, you should be able to count on it covering 75 percent of your expenses, so TPD insurance will cover the remainder.  And in fact, the remainder can be reduced if a provision is made to reduce or even eliminate the payments that can be included in part of your expenses, such as your mortgage payment, future school costs for your children, etc.

In the first part of the personal TPD insurance policy advisory, you may find a provision for a lump sum TPD payment to cover the leftover shortfall.

Since there is no way to know the severity of a future illness or injury, it is not possible to identify an accurate recommended benefit amount.  An alternative might be to purchase a TPD insurance policy for the maximum benefit amount available.  However, this could mean being over-insured, with high benefits that translate to high premium costs. Most financial advisors believe that since the potential need cannot be estimated in advance, their recommendations will be budget-based.

Disability support arrangements in all Australian states or territories are inadequate, despite the best efforts of disability workers, support services, and funding from all levels of government.  The system is geared to act in crisis situations rather than establish workable, long-term provisions for the disabled.  In August 2011, the Productivity Commission’s report  was released, with a unanimous recommendation to establish a National Disability Insurance Scheme (NDIS), with need-based funding determined by actuarial assessments, rather than the antiquated system if allocating from historic budgets.

The NDIS is designed to address the fact that disabilities are lifelong sentences, which require a lifelong approach to providing medical care and relevant support. Assessment will take into consideration the entire course of the disabled person’s life, not just their immediate needs. That includes home modifications for things like wheelchair ramps, handicapped bath furnishings – options that give disabled persons opportunities for greater independence and a more dignified existence.

Early intervention is another important component of NDIS, with better support services for disabled individuals and their families that places more control of their care decisions in their hands. By providing comprehensive information and referral services, the disabled would have better options for making informed decisions.

The NDIS will likely evolve over time and what is covered will be better known. By speaking with a personal insurance specialist you will gain a better understanding of your options and how the NDIS may come into play with TPD insurance.


The Importance of Having Critical Illness (Trauma) Insurance

August 6th, 2012 by

Although nobody likes to think about serious illness or injury, much less plan for it, the truth is that Australians are being diagnosed with cancer at increasing rates each year, in addition to increased incidents of heart disease and stroke. Medical science has become so sophisticated in recent years that most people survive serious health problems. In many cases, they not only survive, but go on to live for years. Although this is great news for all of us, it also draws our attention to the cost of surviving a serious medical event, and the affect it can have on our families, lifestyles, and our ability to earn an income.

Trauma InsuranceAlong with the price of experiencing life-saving medical intervention, unless you are independently wealthy or have a comprehensive insurance portfolio in place, the cost of a major medical event can be financially devastating, particularly if you are no longer able to work and earn an income. For this reason, it’s important to consider the benefits of trauma insurance.

Trauma Insurance is also also known as critical illness or accident insurance.

Trauma insurance can pay a lump sum in the event that you are diagnosed with a serious illness or suffer a serious injury, regardless of your ability to return to work. Each insurance provider has their own language and list of medical conditions covered, which is why it is so important to compare trauma insurance policies and select the best one for your needs. Generally, most trauma insurance policies cover cancer, heart disease, and stroke, and can be purchased as a stand-alone policy or along with a life insurance policy.

Generally, most insurance providers pay on trauma insurance claims after you have survived for 14 days past that diagnosis.

Having a critical illness insurance policy in place can mean the difference between surviving your diagnosis and maintaining your quality of life, and experiencing serious financial hardship as a result. Think about it, if you are unable to work and earn an income because of your illness or injury, will you still be able to pay your mortgage and your monthly bills? Will your family’s lifestyle remain intact? A serious medical event can have a deep emotional impact on you and your loved ones; the last thing you need at such a time is the stress of financial worries.

 Who needs critical illness insurance?

If you are unsure about whether or not a critical illness insurance policy can benefit you, speak to a personal insurance advisor who can offer knowledgeable advice regarding your individual insurance needs. There are a number of reasons other than medical expenses for considering critical illness/trauma insurance; other areas that are at risk whilst you may be unable to work, or whilst you may be unable to work in your career are relevant if you:

  • Have a mortgage
  • Have a family who depends on you financially
  • Have credit card debt
  • Have other debts that must be repaid
  • Lack sufficient cash reserves to cover unexpected medical and hospital bills
  • Own your own business
  • Have business partners
  • Hold a key position at work, such as a company director or manager
  • Are self-employed

The cost of treatment for a critical illness can be astronomical. According to the Cancer Council of NSW, women who are diagnosed with breast cancer can rack up more than $40,000 in lost productivity and out-of-pocket expenses while they are being treated.

Find out more about trauma insurance, and compare trauma insurance policies to find one that best suits your individual needs. Visit MultiCover.com.au for more information.

The Value of Children’s Trauma Insurance

August 6th, 2012 by

It’s every parent’s greatest fear:  a serious childhood illness or disabling accident. Children are not supposed to become sick or disabled, and adults rarely think about such tragedies until their own child is stricken.  However, without children’s trauma insurance in place before an accident or diagnosis, the financial, medical, and emotional ramifications of a serious diagnosis can be life shattering.

What type of protection is available for our children’s medical needs, and how best to compare children’s trauma insurance policies to ensure your peace of mind?  At MultiCover.com.au, we provide a variety of providers and insurance plans to compare and choose from.

The statistics can be frightening.  It has been reported that each year more than 600 children in Australia are diagnosed with some form of cancer, and an average of three die from the disease weekly.[i] While it is impossible to protect our children from every danger, being prepared for a serious medical condition can ensure your ability to provide them with the best medical and rehabilitative care available.

In many cases, a children’s trauma insurance policy can be attached to a parent’s policy, offering peace of mind that your child will be cared for if the unthinkable happens. Upon diagnosis, your children’s trauma insurance policy can provide a lump sum payment that may be used to ease the financial pressures that families face under these circumstances. It can also mean the difference between bare bones medical care and access to the best specialists, medications, and rehabilitative care not covered by Medicare or even many private health plans. In some cases, a children’s trauma insurance policy can even provide income replacement benefits for a parent who takes time off from work to care for the child, or fund a family holiday to ease the stress of the situation.

Every insurance provider has their own list of illnesses and injuries covered on their plans, which is why it is so important to compare children’s trauma insurance policies and choose the one that will provide you with the best coverage for your family’s needs.

Generally, most children’s trauma insurance policies cover:

  • Loss of vision/blindness
  • Brain injury/brain damage
  • Cancer
  • Heart disease/cardiomyopathy
  • Kidney failure (chronic)
  • Hearing loss/deafness
  • Encephalitis
  • Emergency hospitalisation/ intensive care
  • Intracranial benign tumour
  • Dismemberment/loss of limbs or sight
  • Loss of speech
  • Head injury/major head trauma
  • Organ transplant
  • Meningitis
  • Paralysis
  • Burns
  • Stroke

Remember, there can be significant differences in the medical definitions listed by insurance companies, so make sure to compare children’s trauma insurance policies and ask a professional advisor for help if you have any questions regarding coverage.

You may want to ask your insurance provider about a policy with a continuation option, which can convert the children’s trauma insurance policy to an adult contract after he or she reaches a certain age. Learn more about children’s trauma insurance and compare policies by visiting MultiCover.com.au, and discover the peace of mind that insurance protection can bring.