A fate worse than death….?

When I meet with clients most of them have a good idea about what insurances are available

to them in order to help protect their family if the worst happens but not many have a clear

understanding of the link between the insurance and the event, more so the impact that the event

has on their family, not only financially but emotionally.

 

As far as personal insurances go Life insurance is about as straight forward as it gets. If you die, or

become terminally ill, your beneficiary receives the benefit. In most cases the benefit will help

alleviate the burden of a mortgage and hopefully ensure that the costs of raising any dependent

children are taken care of. Most people understand that at some point we are all going to pass on,

buy the farm, push up daisies, kick the bucket or fall off the perch so looking into life insurance

makes sense.

 

Income Protection is another type of insurance that many people are seeing the value in acquiring,

more so now due to increased public awareness thanks to marketing campaigns run by

direct insurance companies. 60% of Australian’s will be disabled for more than one month

during their working life, 15% for more than three months. How this can impact families becomes

quite obvious when you look at the average family’s savings. Even though the practice of saving

money has grown over the last 5 years, most families don’t have enough savings to live on in the

event their household income ceases due to them being unable to work because of accident or

illness. How will they pay their mortgage, school fees, buy groceries?? Again most people can see

the risk in this scenario and purchase income protection accordingly.

 

The insurance that many people don’t know much about, or understand, is called Total and

Permanent Disability Insurance or TPD. Like life insurance TPD pays out a lump sum

benefit in the event the insured is unable or unlikely to work again……ever. In most cases this is a

very significant event. TPD is also similar to Income Protection in that it is payable upon the insured

being unable to work due to illness or injury but with the illness or injury, funnily enough, being total

and permanent. When considered as part of a comprehensive wealth protection plan the TPD

benefit should align itself with the life insurance benefit they are, after all, very similar situations.

The only difference between death and TPD is that with TPD the insured is still present. From a

financial perspective TPD is a far more costly scenario, hence the title of this article.

The death of a loved one, although sad and always difficult to comprehend,

is a finite event. It sounds harsh but losing someone in our lives is followed by a grieving process

which ends with us accepting their death and thus allowing us to move on. With TPD comes the grief

and acceptance but doesn’t end with us moving on. Instead it’s a situation whereby the loved one’s

become the carers for the totally disabled and in many cases do so for their whole lives because

there is no other option. Insurance is about providing options. Adequate TPD insurance means not

worrying about how you’re going to pay the mortgage next month or afford continuing care because

it has allowed for the house to be paid off and the best care provided. You don’t have to worry

about taking the children out of their school to place them at a more affordable one because their

education is now assured.

 

If there are people that depend on you there is a need for Life insurance. If there is a need for life

insurance there is a need for Total and Permanent Disability (TPD) cover.

 

Jon Ahlberg – Authorised Representative