Although Australia has a strong medical system when compared to other countries many types of treatments for illness or injury (either wholly or partly) are not covered including medical expenses but also recovery and rehabilitation costs. Importantly, if an income earner is unable to work there are impacts that cause stresses including the financial disruption due to loss of income.
In approximate terms, one-third of households are renters and one-third of households have a mortgage. In the event of disability, the landlord is unable to allow the family to remain in the property rent-free for an extended period and the bank in the case of a mortgage will generally only give a limited reprieve in which repayments are deferred but interest continues to accrue causing the debt to grow.
Another issue is the repayment of car loans, if any, credit card debt and personal debt, if applicable. When considering the impact of a disability, it is important to consider how common it is for families to break down where there is no disability insurance.
Disability insurance cover is a matrix or system of risk cover that steps in where the unexpected happens; a disability of an income earner or in some cases an adult that is not currently earning an income. Disability insurance Australia is an important part of your strategy to protect your family.
Disability insurance Australia refers to three main types of disability insurance cover: total and permanent disability (TPD); income protection (IP); and trauma. Each are distinct types of disability insurance but sometimes overlap necessitating disability insurance advice so that you understand how, when and for what you are covered in the event of a disability.
Total and permanent disability (TPD) is a type of disability insurance cover that is instigated due to an illness or injury that results in a disability that is total and permanent. It may cover circumstances, where your ability to work is severely impacted.
The terms of the TPD insurance cover have a material impact on whether, when and how you are able to claim. For instance, these types of disability insurance policies may cover you if you are not able to work in your “own” occupation. That is, you are not able to go back to the occupation that you know and / or have been trained.
However, other types of TPD are disability insurance policies that only cover you if you are unable to go back to “any” occupation. The distinction is important as the cover is not instigated if you are able to go back to “any” occupation including an occupation that is not your “own”. Other distinct terms including ADL cover only limited types of circumstances in which you are covered. We find that many potential clients have ADL cover without knowing it, and it is usually insufficient.
TPD and its different terms highlight the importance of disability insurance advice. Further disability insurance policies in the form of TPD can be linked to life insurance, and held wholly or partly inside and outside superannuation. At Setch, as part of our disability insurance advice, we develop strategies for our clients leveraging our expertise to customise the insurance to make it work for you, and find you the disability insurance cover that is right for you.
