Total Disability Insurance
Total Disability Cover (TPD) provides a lump sum payment should you completely lose your ability to ever work again (or carry on your normal tasks, if you are not employed), as a result of illness or injury. TPD Cover is designed to help alleviate the significant financial impact that losing an income forever would likely cause. The lump sum can help reduce debt, purchase specialised equipment, pay for home modifications, provide additional care, create an investment fund to generate ongoing income or to enable business ownership to be restructured, amongst other things. The purpose of the funds is entirely yours to decide.
Early payment of Life Cover benefit or a benefit on its own
You have the choice to select accelerated TPD Cover which means in the event of a claim all or part of your Life Cover benefit is paid out. Alternatively, you can select a stand-alone benefit which pays a lump sum which does not reduce any other benefit you might be covered for. The accelerated benefit option is less expensive than the stand-alone benefit option.
Buying back claimed benefits
You can purchase an additional Life Cover buy back option which allows you to buy back any Life Cover which is reduced by an accelerated TPD claim, provided the life assured survives twelve months following the claim.
Continuing cover into retirement
Cover continues even past the traditional expiry age of 65 as long as you continue to have life cover included on your policy. The maximum amount of TPD coverage payable from age 65 onwards will be limited to the life cover amount and any payment under the TPD benefit will reduce the life cover accordingly. The definition of TPD changes from the ability to work to the ability to perform daily living activities once you reach age 65.
Own or Any Occupation Definition
You have the choice of selecting an own occupation definition for disability insurance for an additional premium. This means that the TPD benefit will be payable if you are totally and permanently unable to ever do the specific type of job you were employed in immediately prior to becoming disabled – even if you could do some other type of job. This is particularly valuable for those in very specific areas of work such as brain surgeons who, theoretically, could continue to be GP’s even if they could no longer be brain surgeons due to something like nerve damage in the hands. An own occupation definition would pay out in these circumstances.
It’s not all or nothing
Some insurers will also pay you an early partial payment benefit of 25% of the Total Disability sum assured up to a maximum of $100,000 if you suffer one of the following serious, permanent impairments – even though you may not be totally and permanently unable to work as a result:
- Loss of use of one hand
- Loss of use of one foot
- Loss of sight in one eye
- Loss of hearing in one ear
- Progressive loss of sight or hearing
Bringing you home
If you have been working overseas for more than three months when you suffer a TPD and you wish to return home, your TPD Cover includes a return to home benefit which will reimburse you for the costs of bringing yourself and a companion home to New Zealand (up to certain limits).
Treatment away from home
If your recommended treatment has to happen outside of your hometown, then your TPD Cover includes a support person accommodation and transport costs benefit which will reimburse you for up to ten days accommodation costs and all transport costs for your support person (up to certain limits).
This product is a lump sum type of life insurance product where if you become totally and permanently disabled, the insurer will pay you the full amount you are insured for. This is particularly useful to repay large amounts of debt, renovate your home to accommodate your new disability (if required) and make up for any loss of earnings you may now experience. There is also Income Protection Insurance which is designed to replace a percentage of your income if you are unable to work, but Income Protection insurance is not really designed to repay debts) but it will help you make your repayments on your debts.
If possible in the case of Total Disability, you definitely want to obtain a product where they offer Own Occupation Definition of Disability.
If you would like assistance in choosing whether permanent disability insurance is right for you and whether you would be able to obtain this type of insurance, please contact us for advice and quotes from some of the best Disability Insurance Companies in New Zealand.