Trauma Insurance Versus TPD – Which Do You Need More?
Getting comprehensive coverage against unforeseen events that could leave you unable to work is critical, especially when you have a family or loved ones that depend on you to provide their daily needs.
Trauma insurance and TPD insurance are both meant to protect your financial stability in case you are unable to earn a living, but each has its own approach to personal risk protection.
Generally, trauma insurance is meant to cover you in case you are diagnosed with a condition that is specified in your policy. Total and permanent disability insurance covers you in case you become permanently disabled and unable to work. There are certain cases in which trauma and TPD insurance overlap. For instance, a condition that would typically be included in a trauma insurance cover may also lead to an individual’s inability to ever go back to work. However, there are also certain cases that are unique to each policy that the other could not cover, more information here.
Trauma insurance limitations
Many people take out trauma insurance alone, believing that it has a much wider scope than TPD insurance. However, there are many conditions that are not covered under your typical trauma insurance policy including certain chronic brain syndromes, emotional disorders, cardiovascular disorders, musculoskeletal disorders, ear and eye disorders, respiratory disorders and diabetes. These conditions could easily impede your ability to work permanently, but if you do not have TPD insurance, your trauma insurance policy may not pay out.
Risk protection gap
When considering trauma insurance versus TPD, it is important to understand that taking out trauma insurance alone leaves a gap in your insurance protection. It is also important to note that the risk of total and permanent disability could be equal to that of a serious illness. In fact, some insurers have a higher proportion of TPD payouts claim than trauma insurance. In addition, illness accounts for more successful total and permanent disability payout claims than accidents. As long as an illness prevents you from working again, you are eligible for a TPD claim.
The greatest problem when dealing with TPD insurance claims is the need to prove that someone will never return to work. However, many TPD insurance policies today use the wording “unlikely to work again” as opposed to “unable to work again”. In addition, many policies today have a shorter qualifying period to make TPD more conducive to allow claims.
Ideally, in order to have full risk protection, you would need both trauma insurance and TPD coverage. Fortunately, many insurers today allow buyers to purchase joint policies that provide both types of coverage. However, a joint policy has certain implications, such as having your TPD coverage cancelled if you take out your trauma insurance benefits. You could also get standalone policies for both covers from the same insurer for a discount. Read: Customer service in the insurance industry
It is important to consider your individual circumstances when taking out any type of insurance policy. Speak to your financial planner for advice concerning trauma insurance versus TPD. At the end of the day, you should be able to get an insurance cover that is affordable and suitable for your situation.