The total and permanent disablement (TPD) insurance, also known as Permanent Disablement
Benefit, also provides a lump sum. This amount, called the sum insured, which is
chosen at the outset, is paid if certain criteria of disablement from the ability
to work are met. Most TPD definitions have two parts:
- Immediate qualification to claim if the insured person loses sight or use of a limb;
or
- Qualification after six months off work if disabled according to policy definition.
This is usually unable to work ever again in own occupation or in a similar occupation
for which reasonably suited. Also can sometimes be unable to work ever again in
own occupation, depending on the policy. They are a more stringent policy than income
protection which only requires temporarily disablement from work.
In most cases TPD is added to a term life policy and so the payment made as a
TPD payment is simply an advance of part or all of the death cover.
Some life companies also offer‘stand alone’ TPD insurance.
Applicants must be employed and some companies will insure applicants involved in
full house duties. Ages 21-55 are the usual applicant
Probability of suffering a major illness
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What are the chances of:
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Your house or contents being damaged or destroyed by fire over the next 35 years?
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1 in 7
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Your car being stolen (total) loss over the next 35 years?
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1 in 6
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You suffering a major medical illness (e.g. cancer or heart disease) between the
ages of 35 and 65?
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1 in 3
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Source: 1.Insurance statistics Australia 1998. NRMA Car Theft
in Eastern Australia 1996; 3. Pricing Dread Disease, Inst of Actuaries of Australia
1994
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