TPD – Total and Permanent Disability Insurance Explained

When securing insurance, it is often wise to look at alternative coverage, referred to as a rider, which will supplement the insurance benefit or cover circumstances not covered by simple life insurance. One such “rider” is Total and Permanent Disability, or TPD.

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The death of the primary wage earner in the family is not the only circumstance that can financially destroy a family.

Going through some type of accident or being diagnosed with a health condition can be just as devastating, if not more so because of the constant financial drain.

Securing TPD offers an insurance payout while the insured is still alive to help alleviate the financial burden in these cases.

One of the deciding factors for a benefit to be paid is the severity of the injury or condition. The insured would have to be evaluated to determine the extent of his or her disability. If they are found to be unable to perform the essential duties of their position as well as everyday life tasks, such as dressing themselves, some type of benefit is likely to be paid out.

Why Purchase Total and Permanent Disability Insurance?

In a situation as outlined above, the financial burden will often force families into bankruptcy. Not only are they losing an income, but there are often excessive costs realized just to allow the individual some quality of life. In addition, the everyday bills, such as credit card and mortgage payments, are simply not going to go away.

The benefit paid can help to pay off existing debt as well as help to pay additional costs now related to the injury or health condition. Benefits can also be used for education or training costs of the spouse of the injured so they can enter the workforce. It could even be used to help them start a home business so the spouse can stay home and care for their disabled spouse while still being able to earn an income.

What Is the Difference Between Critical Illness Cover and TPD?

Riders are very common on life insurance policies. One such rider is critical illness cover. A policy with this rider would pay out if the insured were to be diagnosed with some type of life-threatening illness, such as cancer. However, a permanent disability would not be covered under a typical critical illness policy, so the TPD rider can be added.

Typically, any type of severe illness, health condition, or injury not covered in critical illness can be covered in TPD. For example, some health conditions may not be immediately life threatening but they can prevent someone from being able to work. One condition that must be met, however, with this coverage is there is no recovery expected and the individual will suffer from this condition for the remainder of his or her life.

In some cases, this type of insurance will be offered by the employer. However, it should be noted the coverage is often minimal and having your own coverage to supplement it is a wise choice. Claybrooke Life Insurance is here to assist you in every way to find an initial or supplemental policy that will meet your needs.

TPD Defined

Total and permanent disability coverage has seen its fair share of scrutiny over the years. Much of this confusion fell on providers as consumers were unsure of or did not understand exactly what was covered in the policy. They would secure a policy with the understanding that virtually every condition and situation was covered only to have their claim declined by the insurance company.

A perfect example of a mistake made by the typical consumer was in purchasing TPD when income protection would have actually been the correct type of insurance policy. Because TPD is also tied into income, consumers wrongly assumed this would cover them when they were out of work for any reason, which is not the case. The policies may sound similar in nature, but they are quite different in what they do and do not cover.

All of this confusion led to the Association of British Insurers, referred to as the ABI, to call for clarification on the part of the insurance companies regarding terms included in policies. In the early months of 2011, a new statement of best practices for critical illness was published. This groundbreaking document clearly laid out insurance terms and what is and is not covered under these policies.

From a consumer standpoint, it offered clarification for confusing terms and finally allowed them to secure a policy knowing what was and was not covered in their policy. Over the past two years, consumers have become much more knowledgeable about policies and are finally able to secure the proper coverage needed without any confusion.

Don’t Wait Too Long

In no way will Claybrooke ever pressure you regarding the purchase of a term life, critical illness, or TPD coverage, but you should begin the process of comparing policies and premiums as soon as possible. Tragedies happen every day and while we do not like to think about them happening to us, the harsh reality is that if you are uninsured, the tragedy or illness will not only affect you, but also the financial security and future of your family.

In fact, the younger and healthier you are, the more beneficial it is to secure a policy now. Premiums are much lower for younger adults as well as those in good health. You are much less of a risk for an insurance company and rewarded with lower costs for cover. If you are unsure about the type of cover you need, feel free to contact one of our insurance experts to help you find a policy.