Insurance can be a daunting concept, not only because of the grinding, complicated bureaucracy that many people attribute to the process, but because applying for insurance is an acknowledgement of you and your loved one’s mortality, and the very real possibility that severe or even critical injury or illness could befall you or someone you love.
But as uncomfortable as it may be, insurance is essential for when the unthinkable happens, providing income protection, financial security and peace of mind. It is always better to have it and not need it than to not have it and need it.
The difference between trauma insurance and total and permanent disability insurance is a regular source of confusion for people looking into insurance options as they appear to be quite similar. So, we have addressed the similarities, specifics and differences between trauma insurance and TPD insurance below so that you have a better understanding of what you need.
What is Trauma Insurance?
Trauma insurance, which is sometimes referred to as critical illness insurance, provides coverage in the event of a serious illness or major injury (which was predefined), and pays a lump sum payout in order to assist with medical expenses and bills.
The most common trauma-related claims are for cancer, heart attack, stroke, heart conditions and degenerative neurological disorders.
Do you need trauma insurance?
Trauma insurance cover helps you or your loved one with money if you or your loved one suffers a major trauma or critical illness. There are unexpected costs that arise from critical illness or injury, and it is always best to be on top of financial planning.
In the unfortunate event that you or a loved one suffers a serious injury, you don’t want to be overwhelmed by the pileup of medical bills, rehabilitation costs and lost income. After a serious accident, your time, effort and energy is spent recovering or helping your loved one recover, but the living expenses explode, particularly with the lost income
Conditions covered by trauma insurance policies typically include:
- Serious heart conditions – heart attacks and coronary bypass surgery
- Neurological conditions – multiple sclerosis, stroke, Alzheimer’s
- Blood disorders – occupationally acquired HIV or hepatitis B or C
- Major organ transplants and organ disorders
- Major head trauma
- Severe burns
- Permanent loss of hearing, speech or limbs
- Some intensive care treatments
- Cancer
Make sure you review what conditions and traumatic events are covered with each insurer in their product disclosure statement.
How much cover do trauma insurance policies offer?
The amount of coverage will always depend on the insurance company or the insurance broker you use. While the amount of premiums you pay will depend upon a variety of factors, including your age, general health and preexisting conditions.
In the case of a traumatic injury or critical illness which is covered by a trauma policy, the policy holder will receive a lump sum amount to provide relief for the delicate financial situation that critical illnesses can place on a family.
This cover will be different between insurance providers, but it will generally be similar. The terms and conditions will all be laid out in the product disclosure statement so you aren’t surprised.
It is also important to note that the premiums you pay on your insurance are recalculated every year, and typically become more expensive as you get older. These are called stepped premiums.
How long does a trauma insurance claim take?
A trauma insurance claim is generally settled within a month, to a number of months, as it is a very complex process that involves a lot of steps. However there are scenarios where the insurance providers need more information regarding insurance policies, pre-existing conditions, or further requirements that need to be fulfilled by the claimant. In these cases, the process can be delayed even further.
What is Total and Permanent Disability (TPD) Insurance?
Total and Permanent Disability Insurance provides financial support to you and your family in the unfortunate event that the claimant is rendered totally and permanently disabled and therefore unable to work ever again, work in their specialised industry, or, in some cases, perform home duties. While it is often linked to a life insurance policy, this kind of disability insurance generally does not cover death.
TPD insurance is designed to ease the financial burden that serious disability and loss of work can place on a family, as well as allow for necessary adjustments to the changing lifestyle and loss of income throughout recovery. The most common TPD claims are for musculoskeletal disorders, injuries from accidents, mental health, cancer and nervous system disorders.
Do you need TPD insurance?
It is always best to be financially prepared for the possibility of serious illness or injury, and the related stress that this could place on you and your family. However what insurance cover you need will ultimately depend on your health, occupation, personal circumstances and your financial situation. You need to take into account living expenses, debts, medical bills and rehabilitation costs, as well as planned savings for retirement.
The potential loss of income stemming from the inability to work could place extra financial pressure on your household, and without financial assistance, it may be difficult to keep up with the costs.
How much cover do TPD insurance policies offer?
The amount of coverage will always depend on the insurance company.
In the unfortunate event of an illness or injury which is covered by a policy, an amount will usually be paid out in full as a one-time lump sum benefit which will be paid directly to the policy holder.
How long does a TPD claim take?
Like trauma insurance claims, TPD claims are generally settled within a number of months. However, the length of time that a TPD claim takes varies from provider to provider.
The claim process can be daunting and complex, particularly at a time when you or your loved one are in poor health or in financial trouble. It may be beneficial to seek financial assistance to get and understand the full story.
In some cases, an insurance provider will need more information regarding insurance policies, pre-existing conditions, or further requirements. In these cases, the process can be delayed even further.
Can you work after a TPD claim?
It will depend on the policy and the insurance provider.
TPD insurance is often paid out on the proviso that you are either unable to work at all or unable to continue to work in your specialised field. In this circumstance, you would not be able to work after receiving a TPD claim.
It is recommended to contact an expert to understand the specifics of your individual cover.
Should I Get Both TPD And Trauma Insurance?
The main difference between trauma and TPD insurance is that the former offers a lump sum payment if you are diagnosed with an illness or injury which is covered by the policy, while the latter offers a lump sum payment in the event that a serious illness or injury (again, covered) renders you permanently disabled and unable to work in the occupation you are educated, trained and have experience in.
Many Australians do have both TPD and trauma cover, as they are designed to support you through different circumstances. Trauma insurance pays for the claimant’s recovery from a traumatic accident or critical illness, while TPD insurance assists with loss of income when the claimant becomes unable to work.
You must decide which cover suits your pre-existing conditions, what the waiting period will be, whether your health, financial situation or occupation will put you at risk of paying a higher premium. It can be worthwhile to consult a financial adviser and examine your super fund as some insurances can be tied in with your fund.
Need Help Finding the Right Life Insurance Products for You?
When it comes to getting insured, it is all about finding the best type of insurance to match your circumstances. You may know that any insurance related to health is based on pre-existing conditions and factors, such as smoking status, kinds of occupation or terminal illness.
With the help of Curo Financial Services, there’s no need to spend countless hours researching insurance products, policies and providers on your own.
Our team of advisors understand the ins and outs of the life insurance market, and can provide you with the information you need about:
- Life insurance
- Trauma insurance
- TPD insurance and;
- Income protection insurance
To find the cover that’s right for you, simply call 1300 366 817, email [email protected] or fill out our online contact form to request a callback from one of our friendly staff.
FAQS
Can I get a TPD claim for mental illness?
Yes.
Curo Financial Services’ TPD insurance does cover mental health conditions, as they can significantly impact a person’s ability to function and work. As with a physical illness, the claimant must consult their treating GP and a specialist who can confirm that their mental illness is severe enough that it will prevent them from working in their current occupation.
Is TPD Insurance Tax Deductible?
Generally no, unless the policy is held within super or as an asset of the business.
The ATO clearly advises that a premium or any part of a premium is not tax-deductible if the policy compensates physical illness or injuries, so if you have purchased trauma cover or TPD insurance policies outside of regular super fund, it will not be tax-deductible.
As for how much tax you pay on a TBD insurance payout, it fluctuates daily depending on factors such as the start date of the fund and amount of days from retirement. Your tax liability will be calculated at the time that the claim is paid, but you can ask our friendly team of experts to clear up any questions you may have.
What is critical illness insurance?
Critical illness cover is just another name for Trauma insurance and covers the same conditions, illnesses and injuries that trauma insurance covers.
The last thing you need is to be confused by different types of insurance, let alone the same type of insurance under different names. It is always best to compare policies, and if you have any questions, contact one of our insurance experts who can provide you with general advice, and talk you through which cover is best for you.
General Advice Disclaimer
General advice warning: The advice provided is general advice only and in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
